In China, the National Bureau of Statistics said gross domestic product (GDP) grew 7.4% during the third quarter, down from 7.6% in the second quarter- the slowest rate since early 2009. In the U.S., the Commerce Department said new home building activity increased 15% in August, up 34.8% from a year ago, significantly exceeding expectations.”
Additionally, economists Carmen Reinhart and Kenneth Rogoff, in a Bloomberg article said, “Five years after the onset of the 2007 subprime financial crisis, U.S. gross domestic product per capita remains below its initial level. Unemployment, though down from its peak, is still about 8 %. Rather than the V- shaped recovery that is typical of most postwar recessions, this one has exhibited slow and halting growth. This disappointing performance shouldn’t be surprising. We have presented evidence that recessions associated with systemic banking crises tend to be deep and protracted and that this pattern is evident across both history and countries.”
- Since publishing “This Time Is Different: Eight Centuries of Financial Folly” in 2009, Reinhart/Rogoff have consistently stated that the current economic recovery is different from typical recessions and will require an extended time period to resolve.
- Regarding corporate earnings results, 1) economic weakness, 2) the U.S. fiscal cliff and 3) unresolved global policy issues are among the concerns facing business managers.
- Regarding results from Microsoft and Google, information technology demand continues to de-emphasize desktop computers, but the shift toward tablets and smartphones presents business challenges as well.
- Regarding weak China GDP results and the strength in U.S. home building, positive and negative economic crosscurrents will continue to challenge investors.