The current slowdown is more than a soft patch – Outside the Box – MarketWatch
By Lance Roberts
HOUSTON (MarketWatch) — For months, economists and the media have proclaimed that we are in full-recovery mode. While the markets were at record highs, unemployment had not improved, economic growth was stagnant and most corporate earnings had little to do with an increase in sales and revenue and were based on moves like laying-off thousands of people and shedding non-performing assets.
Last week, Goldman Sachs Group Inc. GS +2.45% — one of those bullish outfits projecting enthusiasm — reversed its earlier upbeat message, saying that consumer spending is slowing down, which will likely have a negative impact on future growth. The significance is that most analysts and economists are coming to grips with the fact that the economic data doesn’t support stock-market valuations at these levels.
What economists and analysts failed to connect is the contrast between reality and the stock market — the low consumer spending, paltry economic growth, weak hiring by companies and reckless quantitative easing by the Federal Reserve while the stock market soared.
I shared this article with a buddy, here’s his summary… “So, to simplify that: they’ve been printing massive amounts of stimulus money to hide the decrepit state of the Obama economy – which is what has been driving the artificial rise in equity prices. Once everyone finally realizes it’s all smoke and mirrors, the stock market will suffer a massive crash.”