There it is, right at the top of Monday morning’s "What’s News" column on the front page of The Wall Street Journal, "U.S. stocks’ latest climb to record levels is a testament to investors' belief that the domestic economy isn’t about to tip into recession."
You got that right, baby!
Stocks are a harbinger of where investors believe the economy is headed six to 12 months from now, as I noted in a column on Friday. Right now, that sentiment is high on hopium.
The Dow Jones industrial stock average closed above the 28,000 mark for the first time on Friday, and the other two major market indexes, the S&P 500 and the Nasdaq, also notched new record highs.
It's even more striking that these new highs come as the Democrats wield pitchforks and torches and try to remove President Trump from office. And as the media offer only muted coverage, at best, of good economic news: some 5.6 million new jobs since he took office, record-high employment for minorities and women, almost 4 million people getting off the sofa and rejoining the work force, and federal tax revenue rising despite the Trump tax cuts that left more money in our pockets.
Instead, the media would rather cover fears (or hopes, on the part of their Democrat allies) that our economy will plummet into recession — just in time for the 2020 presidential election. In the past few months, the fraidycat chat has been growing on the business cable networks and in other media outlets.
Almost three out of four economists surveyed by the National Association for Business Economics expect a recession by 2021. Oxford Economics, a global forecasting firm, puts the chances of a U.S. recession next year at 40%. So does the much-watched hedge fund manager Ray Dalio of Bridgewater Associates. Redfin, a nationwide real estate brokerage, sees “a very tangible risk” of recession next year.
The National League of Cities says two-thirds of finance officials in major U.S. cities expect a recession by the end of 2020. The Mortgage Bankers Association sees a 50% chance of a recession before the presidential election next November.
That is a lot of fearful fretting from the experts — and the markets are saying they are flat wrong. For now. The longer the recovery from the Great Recession runs on, the closer we get to a recession, eventually; so pixel pundits are more prone to predict possible doom. Financial advisors get fired for being too bullish and losing money for their clients, more so than they get fired for failing to recommend a good buy.
The trouble is, all this negative chatter can become self-fulfilling.
We can talk ourselves into a recession, or extend one, just by worrying too much about it. The media amplify this to deafening levels, in their search for drama and conflict to draw a bigger audience and sell more ads. (And that’s fine, that is the way it always has been.) This media predilection is worse than now, though, as we approach the presidential election.
I saw this from my front-row seat as an anchor at CNBC during the Great Meltdown of 2008. So much doom from so many guests, so many predictions that Wall Street profits would never rebound, that a "New Normal" would constrain growth forever.
This overhang may have hampered our recovery, which in the first years was one of the weakest rebounds ever when it should have been one of the strongest, given how far the economy had fallen.
We have plenty of reasons the economy can keep on growing for another couple of years. Unofficially, if GDP declines for two consecutive quarters, we are in a recession, yet we have had positive GDP growth for 21 straight quarters. That includes ten quarters since the start of President Trump’s first term. And four of those ten quarters saw GDP growth better than 3% — a 50% faster growing economy than in a decade.
Also, in October, we had the 109th consecutive month of positive job growth, which is double the longest previous run on record. And consumer spending, which makes up 70% of GDP, remains pretty strong.
Retailers are beefing up for the best Christmas sales in years, given rosy forecasts.
Which may be why Dems and the media keep stoking our recession fears.
Disbelieve their negative, fraidycat hype.
Dennis Kneale is a writer and media strategist in New York. Previously he was an anchor at CNBC and at Fox Business Network, after serving as a senior editor at The Wall Street Journal and managing editor of Forbes. He helped write “Wealth Mismanagement: A Wall Street Insider on the Dirty Secrets of Financial Advisers and How to Protect Your Portfolio,” by Ed Butowsky, published in August 2019 by Post Hill Press. To read more of his reports — Click Here Now.
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