Tags: David | Frazier | Wall | Street | Spin | Economic | Reality

Wall Street Spin Is Unraveled by Economic Reality

Tuesday, 10 Aug 2010 10:55 AM

Last week, I wrote an article dispelling a myth that has recently been promulgated by Wall Street economists and stock-market pundits concerning the amount of money that Americans supposedly save from their incomes.

Although those economists and pundits have repeatedly claimed that Americans increased their savings during the past two years, reports from the Federal Reserve and certain household surveys reveal that Americans, in the aggregate, have used the majority of their income for recurring household expenditures and to pay down their debt since the so-called economic “recovery” began in July 2009.

This week, I dispel another myth that has been propagated by those same Wall Street “experts,” as well as by numerous government officials, including President Barack Obama. The myth: The economic recovery that took place during the past nine months remains intact and the employment situation is continuing to improve.

ALERT: Frazier: Stocks Rolling Over. Get Out Now.

Although our nation’s gross domestic product, or GDP, rose during each of the past three quarters, most Americans have experienced few economic improvements since the beginning of the economic “recovery.”

For example, the latest statistics from the U.S. Department of Labor reveal that approximately 16.5 percent of Americans who either want or need a job were unable to secure full-time employment as of July 31.

During that same period, a shrinking number of Americans either owned a home or were making payments toward owning a home, while an increasing number of our citizens entered home-foreclosure proceedings.

Of utmost concern, a report issued last Wednesday from global outplacement firm Challenger, Gray & Christmas indicates that the employment situation will continue to weaken during the months ahead, after the U.S. economy experienced 131,000 job losses during July.

Meanwhile, recent reports from the Institute of Supply Management and the National Association of Realtors reveal that manufacturing activity in the United States fell for the third month in a row in July and that the number of contracts signed by interested homebuyers to purchase a home declined for the second month in a row during June (the latest date for which data is currently available).

And, in spite of the 72 percent advance in stock prices since the major stock-market indices bottomed on March 9, 2009, the average net worth of American households has risen only modestly due to the tepid increase in home prices and the fact that a very low percentage of Americans participated in the bull market that occurred between March 2009 and April of this year.

Finally, reports issued last week from retail chain stores and automakers indicated that U.S. households continued to rein in their spending during July.

As you can see, the facts mentioned above don’t support the claims that have been propagated by the so-called Wall Street “experts.”

Indeed, those facts paint an entirely different picture concerning the U.S. economy and the likely direction of corporate profits and stock prices during the months ahead.

I urge you to stop listening to the mostly self-serving money managers and economists that regularly appear on TV shows.

Note from Moneynews:
If you’d like to be kept abreast of actual economic and financial developments and their longer-term effect on securities prices (rather than relying on misrepresentations like the ones discussed above), try a free sample of David’s investment advisory service, The ETF Strategist. Click Here to Find Out More.

About the Author: David Frazier
David Frazier is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He also writes two very successful investment newsletters. Discover more by Clicking Here Now.

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Last week, I wrote an article dispelling a myth that has recently been promulgated by Wall Street economists and stock-market pundits concerning the amount of money that Americans supposedly save from their incomes. Although those economists and pundits have repeatedly...
David,Frazier,Wall,Street,Spin,Economic,Reality
598
2010-55-10
Tuesday, 10 Aug 2010 10:55 AM
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