Browse by Tags

Forecasts & Trends

Blog Subscription Form

  • Email Notifications
    Go

Archives

  • Obama’s Decision: Millions More on the Dole

    In 1996, President Clinton and the Republican-controlled Congress passed sweeping new welfare reforms. In doing so, they included strict regulations that required welfare recipients to work (or actively look for work). And they made it clear that "work" did not include such things as bed rest, exercise or personal past-times. The welfare rolls plummeted in the years following 1996, and the program was hailed a great bipartisan accomplishment.

    But on July 12, President Obama’s Health and Human Services Department issued an administrative order to the states that reverses the work requirements contained in the welfare law. Many believe this action is illegal, and it will almost certainly be litigated in the courts. But in the meantime, this order guts the work requirement in the 1996 welfare reform law and will allow millions more Americans to qualify for welfare benefits.

    On another note, the number of Americans going onto Social Security Disability Insurance in the 2Q of this year greatly outpaced the number of new jobs created in the economy for the first time. By April of this year there were a total of 10.8 million on disability, the highest ever. Likewise, there are more Americans than ever before on food stamps - 46.4 million as of March. Ditto for the number of Americans living in poverty - an estimated 15.7% of the population.

    These are very depressing numbers. The media tells us that this is all because of the weak economic recovery and continued high unemployment. The weak economy is certainly a big part of the problem, but could there be other factors involved? Could it be that the current administration in Washington wants more Americans to be dependent on the government? I will address this question at the end of today's wide-ranging E-Letter.

    ...
  • Is The Economic Recovery Stalling?

    Economic reports in recent weeks have been disappointing overall, and there are growing concerns that the economic recovery may be slowing following 3% GDP growth in the 4Q of last year. Thus, all eyes will be focused on this Friday’s first report on 1Q GDP. Only a month or so ago, some worried that the 1Q GDP number could come in below 2% due to the slowdown in inventory rebuilding this year. But as you’ll read below, most pre-report estimates for 1Q GDP are north of 2%.

    Whatever the GDP number is on Friday, there is a feeling that the economic recovery is stalling a bit. Some of the same spoilers that interrupted the recovery in 2010 and 2011 have emerged again this year, raising fears that the winter’s economic strength might dissipate in the spring and summer.

    In addition, the Fed Open Market Committee is meeting today and tomorrow. Since we won’t see the policy statement from the meeting until tomorrow, we can only speculate as to whether the Fed discussed any new stimulus at this meeting. I still don't believe that QE3 is off the table. I’ll give you my thoughts below.

    Finally, a record 5.4 million workers and their dependents have signed up to collect federal disability checks since President Obama took office. Many unemployed apply for disability benefits as soon as their unemployment benefits run out. There are now a record 10.8 million Americans on disability. This is a real travesty on so many levels!

    ...
  • Has the Liberal Economic Experiment Failed?

    Introduction

    Monday holidays always cut into our writing time, so this week we have elected to reprint one of the more interesting articles I have read recently.  I think you will like it unless you are a big Obama fan, in which case, you’ll probably find it disappointing.  In any event, I think this piece is spot-on as we close in on the mid-term elections.

    Following that article, I will update you on the performance of Hg Capital’s Long/Short Government Bond Program which has continued its winning ways in 2010 following its record year in 2009.

    ...
  • CBO: U.S. Debt Crisis On The Horizon

    Introduction

    The non-partisan Congressional Budget Office (“CBO”) released a very troubling new report in the last week of July. The new report is entitled “Federal Debt and the Risk of a Fiscal Crisis” and warns that we will face financial calamity if we do not get our massive budget deficits under control.

    The CBO report points out that the national debt, which was 36% of the gross domestic product three years ago, is now projected to be 62% of GDP at the end of fiscal year 2010 on September 30. And it continues to ratchet up every year thereafter, even in the CBO’s “baseline” (more conservative) projections.

    The CBO specifically warns that our out-of-control deficits could lead to the ultimate debt crisis when buyers of Treasury securities lose faith in the government’s promise not to default on these most trusted financial instruments. No kidding!

    I have been writing about the perils of increasing our national debt year after year since back in the 1980s when I criticized President Ronald Reagan for doing so, and every president since him. The concern was that in 20-30 years, the ultimate debt crisis would come. Guess what: it’s now been 20-30 years, and even the CBO now warns that the day of reckoning is on the horizon.

    This week, I’ll summarize the latest CBO report. After reading about it, you need to think seriously about how you will protect your assets when the day comes where US Treasury securities are no longer trusted – think sharply higher interest rates! This will be a continuing theme in the weeks and months ahead.

    But before we jump into the latest troubling CBO report, let’s take a quick look at the latest economic reports, most of which have not been favorable. It has been several weeks since I wrote about the economy specifically, so let’s get caught up.

    ...
  • The Economy & This Rocky Recovery

    For the most part, the economic reports over the last month or so have been positive, including last Friday's 1Q GDP increase of 3.2% (annual rate). Most economists agree that the recession hit bottom in the middle of last year, and we have now seen three consecutive quarters of positive GDP growth. Yet while it would seem safe to conclude that the Great Recession is over (for now), economic growth will be handicapped all year by the continued housing crisis. Home foreclosures continue to increase at a record pace, including an unprecedented 367,056 properties in March alone. Thus, it is quite possible that the 3.2% growth rate in the 1Q will be the best we see all year. We will take a look at most of the latest economic reports in this issue, as well as the rapidly growing problem in home foreclosures.

    ...
  • Why the Economy May Disappoint in 2010

    This Friday we will get the first report on 4Q GDP, and most forecasters expect it to be a very good one. While most forecasters believe the economy rebounded strongly in the 4Q, largely due to inventory rebuilding, these same analysts are lowering their estimates for growth in 2010. Why is that? Mainly because consumer spending is not rebounding as many had expected. With unemployment remaining above 10%, most consumers are worried about the future, as they should be. This week, we take a look at the latest economic reports, and I bring you one of the best articles I have read regarding how we got in the mess we're currently in. It all should make for an interesting letter.

    ...
  • Economic Recovery vs. Rising Unemployment

    This Thursday, all eyes will be on the 'advance' estimate of 3Q GDP, and most analysts expect it to be positive and confirm that the US economy emerged from the recession in the July-September quarter. Yet even if the GDP report is positive on Thursday, we all know that the unemployment rate (currently 9.8%) continues to rise and is likely to go up for at least several more months.

    If the government counted everyone who is unemployed, or is working part-time because they can't find a full-time job, the real US unemployment rate was 17% as of the end of September. So even if the recession 'officially' ended in the 3Q based on this Thursday's GDP report, this economy is far from out of the woods. And if the dollar continues to fall, even more dire consequences (ie - a double-dip recession) are likely to follow. It's a lot to cover in one letter, so let's get started.

    ...