The American Ecomomy Can Heal Itself, If Only The Economy Would Help

The stock market is back to where it was a month ago. The frightening sell-off is over. Now that Intel (NASDAQ: INTC) has posted spectacular results, Wall St. believes that both the consumer and enterprise sectors are spending on tech again. People and companies that can afford PCs and servers must be doing well.

Nouriel Roubini’s call for more stimulus spending to keep the US economy out of another recession has gone nearly unheard. The Administration and Congress will not invest any more money in the recovery. Perhaps that is because they fear incurring the wrath of voters angry over the growing deficit. Some politicians may actually feel that the GDP machine of America is so large and resilient that it can bounce back the way that it did in 1973 and 1982. With such a strong set of precedents, this recession may well be just like any other.

The caution that fell over Washington and the market a month or two ago has dissipated some. The Fed said that the economy has weakened a bit, but its key pronouncement is that GDP is still expanding, and will keep doing so. If that is so, then improvements in unemployment must be around the next corner.The markets shrugged off two important pieces of news. The first is that the trade gap grew 4.8% to $42.3 billion in May, the highest level since November 2008, well into the most recent recession. Imports from China were up 12.1%. That seems to roughly coincide with the improvement in China exports. The trade surplus of the world’s most populous country widened to $20.02 billion in June.? May and June may be the start of a trend.

What a difference a 30 days makes. Housing was in deep trouble in May. Unemployment did not improve much. Census workers are being laid off, and as many as 700,000 may be out of work soon. Consumer confidence was falling off.

No one should be surprised if the market rallies on the results of Intel and improved numbers from other big companies. The jobless recovery will work! until i t doesn’t.

Douglas A. McIntyre

Tags: CASC ,Great Health Stocks ,Great Stocks To Hold For 2012 ,Great Stocks To Invest In ,Health Stocks ,Cascade Earnings Preview