Market Talk

Capital Economics out today with a thorough, frank and reasoned report on the US economic outlook, taking a look at a host of areas like consumption, investment, external demand, labor market, prices and monetary & fiscal policy. The upshot? Recovery is “likely to remain muted for years to come.”

Let that sink in for a minute. For years to come. Doesn’t seem as if investors have really wrapped their heads around that concept, but the firm builds a pretty compelling case, in straight-forward terms. For example, this simple point:

The fundamental obstacle preventing a return to stronger economic growth is the damage done to the balance sheets of households and financial institutions by the housing bust and
the related financial crisis.

Household deleveraging is “still in its infancy,” the firm says, noting that since the start of 2008, household debt has fallen $470 billion, but half that decline has come because of defaults, not from folks paying off their debt. “Overall, the downward pressures on real incomes and the structural problems caused by high debt and lower asset prices mean that households will not be able to spend freely for at least the next two years.” Continue reading…

Just an average Tuesday in the Dow Jones newsroom.

I ran into a reporter in the halls here this morning, someone I know well but don’t see all the time as we work on opposite ends of the newsroom.

“What’re you up to?” she asked.

“Same thing I always am,” I said. “Trying to unlock the code. Figure out what it all means.”

“Will you share it when you do?”

“I dunno,” I said, “depends on what it says.”

That’s my job, basically, trying to crack the code. I feel like I’m in the Matrix sometimes, flooded with millions, trillions of bits of code, trying to piece it all together and figure out just what it is I’m looking at. Some days, it seems like the world’s going to implode. Some days, it seems like the clouds are parting. Some days I’m so busy it I’m drowning in information.

And it occurs to me that all of it is just part of a whole. The world’s never going implode, the clouds will always clear, only to come back again another day. The waters will always keep flowing, whether I’m in them or out of them.

There will be some resolution of the Greek crisis. It will involve a lot of pain for the Greek people, and it may or may not unravel the entire Eurozone (likely not, but these are extraordinary times.) There will be an end to the great deleveraging wave that has washed over our economy. The U.S. will some day find that great spark that will get the economy growing again (it hasn’t come yet, and it’s not on the horizon either, for that matter.)

Continue reading…