From the Desk of Bob Caldwell

Which Way Are We Headed?

     Most everyone had built a slowdown into the equation this spring and the only question was -- how slow would it get? Starting with the uninspiring employment report for March, we had a series of economic reports released that were tepid at best. The good news was that unlike other pauses in this recovery, few were expecting the slowdown to turn into a double dip recession threat. The stock market continued to advance in the face of this news because corporate profits were still strong and inflation would remain tame in the face of the slowdown. Oil prices, interest rates and gold prices all eased during the period in which the stock market flourished -- something of an anomaly. Then came the jobs report for April.

     Turns out that the employment report for March was not as weak as we thought as the numbers for both February and March were revised upwards. April's numbers were respectable, but not astounding. The stock market rallied again in response to this good news, but oil prices and interest rates increased at the same time. So the question is--do we have a slow down or not? One positive employment report does not erase several weeks of weak data in other sectors of the economy. On the other hand, employment growth has the potential to spill over into all economic sectors, from real estate to industrial production. If we had one strong report released in four weeks, we would want it associated with employment. While there is presently no danger of the economy overheating right now, those betting on a slow spring and summer may have cast their bets too early. And those waiting for rates to continue to fall may have also overplayed their hand.

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"From the Desk of Bob Caldwell" Blog, Copyright 2013 Bob Caldwell