The Economic Outlook Remains Unusually Uncertain
Jul 22, 2010
Posted by Jody Eisenman | Filed under Uncategorized
So said Fed Chairman Ben Bernanke in testimony to the Senate Banking Committee. What does this mean? Well, the Chairman is saying that the economy is really not improving, and he doesn’t have the faintest idea what to do about it. As I have stated previously, http://www.jodyeisenman.com/2010/06/the-jobs-inflation-conundrum/,
The administration is in a tough spot. Interest rates as measured by Fed Funds are almost zero, yet the recovery is stagnating. Unemployment hovers around 10%. In addition, the debt situation is getting worse and worse.
As a president, it’s one thing to know you have a big fiscal problem. It’s quite another when a panel you appointed tells you the policies you have in mind will only make things worse.
That’s what happened Sunday, when leaders of President Obama’s deficit commission offered up the darkest of outlooks for our financial future — calling current trends in U.S. budgets a “cancer” that will “destroy the country from within” unless halted soon. Not exactly encouraging news.
Meanwhile, after a 200 point reversal in stocks yesterday after a weak opening, the market dropped on Bernanke’ remarks. After sitting slightly up for most of the morning, the markets dropped immediately during Bernanke’ testimony to eventually close down over 100 points. As I continue to expect, the equity markets continue to churn in a relatively narrow range. Year to date, the Dow has traded as low as 9686, and as high as 11, 204. However, for most of the year, the range has been less then 1000 points, or around 10%. Just to put this in perspective, in 2008, the Dow traded in a range of over 4000 points. In 2009, the range was over 3500 points.
