This is a syndicated repost published with the permission of Confounded Interest. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.
The Presidential election is just around the corner and it is bad news for the incumbent’s party if anyone notices the softening trends in the economy. Republican President George W. Bush saw a substantial decline in the stock market prior to the 2008 election which greatly helped Democrat Presidential candidate Barack Obama. Other economic variables were deteriorating in late 2007 and up to the election, but the stock market is a highly noticeable indicator.
The stock market has benefited from the unprecedented financial stimulus (Zero interest rate policy and quantitative easing) from The Fed since late November 2008. Although the stock market has not risen by much since The Fed’s QE programs ended.
Here we sit with substantial volatility in the stock markets, awaiting news on what The Federal Reserve is going to do with interest rates.
But on the economy side, we are seeing a downturn since January 2015 in domestic business investment. Domestic business investment generally falls prior to a recession. And it is falling despite The Fed Funds target rate being near zero.
And then we have declining average weekly earnings YoY which have also been falling since January 2015. Not a good sign.
Declining business investment and declining weekly earnings growth are not good signs heading into the Presidential election. But The Federal Reserve will not likely rock the boat prior to the election.
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