Over the past few months, I have presented a lot of information discussing why this economic recovery is so weak. As noted last week, new data confirms that this recovery is the weakest since WWII, if not of all time. Yet despite all the recent disappointing data, there are still some prominent economic optimists out there, including The Bank Credit Analyst. These forecasters still believe that the so-called "soft patch" during the first half of this year was the worst of it, and that growth will be better in the second half of this year. I will summarize this more optimistic outlook below.
Before we get to that, I will review the latest economic reports. There were actually a few bright spots of late, but they were definitely overshadowed by last Friday's very disappointing unemployment report. We end up today by revisiting the debt ceiling debate. Republicans, Democrats and President Obama remain stalemated as this is written. Obama is insisting on $1 trillion in tax increases in return for cutting spending. Republicans are so far holding firm on no tax increases. The government runs out of money just three weeks from today on August 2.
I am still somewhat optimistic that a debt ceiling agreement will be accomplished before the August 2 deadline for default, but both sides have their heels dug in as this is written. Whatever happens, the next three weeks will be very interesting, and the investment markets could go ballistic if a deal is not reached.