The Economy: Glass Half Empty or Half Full?

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GlassHalfFullWell with half of 2012 over, the economy didn’t really improve or get that much worse. You can’t argue that we are in full recover, nor sliding down the tubes to another recession. It really is quite frustrating. Very recently, most of the economic news has not been positive.

So here’s a recap of the past six months economic events. What do you think, do they signal the economy’s glass half empty or half full?

The glass half empty view

1. The Euro-saga: Greece, Italy and Spain. These countries could cause a severe recession in Europe that could spill over to the U.S.

2. Slowing U.S. economy: Growth has slowed below 2% in the first quarter, leading some to believe we are on a path to recession. We just can’t get up the slippery slope with any momentum.

3. Employment numbers slow: At the beginning of the year we actually had some promising numbers. However, lately the numbers seem to be disappearing like a David Blaine card trick. This is the key to economic growth.

4. The Fed is running out of ammo: With an extension of Operation Twist and two rounds of quantitative easing, the economy is still sloooooowly recovering. Some are calling for QE3 at this point. What else can the fed do? Rates are low, but still no definitive rebound.

The glass half full view

1. The European crisis: European politicians and leaders may be forced into comprimises. Debtor nations voters do not want to bear the burden of fiscal responsibility. But rich countries like Germany will need to help with the bail outs. So if they want the help, they’ll have to meet in the middle.

2. Inflation eases: Inflation is down to 1.7% a full 2% lower than the previous year.

3. Unemployment coming down: Unemployment numbers have fallen to 8.2% as of the end of May. Who knows if this is a return to work, or just fewer people filing claims.

4. Fed could be forced to act: The Fed could do another round of quantitative easing. This would spark a rally in the stock market temporarily. Ultimately, I don’t think this helps our economy long-term.

There you have it. You decide if it the economy’s glass is half empty or half full. This is a tough one to call. If you would like a free portfolio review, write me at david@lexwealth.com, or call me at (859) 225-2596.