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Why the Recession Will Likely End Soon
April 7, 2009
The economists at First Trust made some encouraging comments in their recent article about the recession. Here are the highlights I want to share with you:
- The economy and stock market are floating on a sea of liquidity.
- Through Friday, this sea of liquidity had lifted the Dow Jones Industrial Average by 22.5% in less than a month, with the NASDAQ up 27.8% and the S&P 500 up 24.5%.
- If jobs were the catalyst for all economic change, then the economy would never stop expanding if jobs increased; nor would it ever stop contracting when jobs fell ... in the past, the unemployment rate has been much higher than it is today and yet the economy recovered and the stock market boomed anyway. Unemployment is a lagging indicator.
- It takes about six months, but when the Fed injects money into the economy, spending increases. It always works. And this time, there is also a rebound in velocity taking place at this time.
- Very soon, the recession will officially end. This is not a dead cat bounce, and it's not government spending. It's easy money, plain and simple.
