Are CEOs about to boost the economy?
While consumers remain nervous, the corporate sector is gearing up for increased spending.
People have a lot on their minds right now. Mortgage rates are up. Housing has cooled. Job gains have slowed. And now, Democrats and Republicans are once more at loggerheads over the federal budget and the debt ceiling. Thus the recent weakness in measures of consumer confidence.
Expectations for the future, as reported by the University of Michigan's Consumer Sentiment report, have dropped to lowest level in nearly a year.
But executives are feeling pretty good. So good, in fact, that we could be looking at a resurgence in economic growth on a scale not seen in more than a decade.
Both manufacturing and non-manufacturing ISM surveys have surged on a scale not seen since 2003 -- a period that featured an annual GDP growth rate of nearly 6% versus the 1.6% rate we've averaged over the last four quarters.
Another indication comes from Tuesday's Richmond Federal Reserve manufacturing activity survey. While the overall report was a bit of a disappointment (missing expectations on a drop in shipments and hiring) something startling was hidden deep in the details of the report.
No, I'm not talking about signs that inflationary pressures -- something I warned about in a recent column -- are bubbling through the supply chain as the prices paid sub-index rose to an 11-month high or that the prices-received sub-index jumped to its highest level since November 2011.
While it's true that higher inflation is a proxy measure for faster economic growth (since it reflects increased demand and/or a reduction in available capacity), I'm talking about a much more direct measure of strength.
I'm talking about the way spending intentions on capital expenditures surged to +31 in September from +15 in August -- reaching 13-year highs.
This is a big deal because a lack of corporate investment has been one of the main reasons the economy has been so lackluster to date.
If this is true, that it'll provide a boost to economically-sensitive material and industrial metal stocks like Molycorp (MCP), which is up 13% since I added it to my Edge Letter Sample Portfolio on Sept. 12.
Disclosure: Anthony has recommended MCP to his clients.
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www . businessinsider . com/september-richmond-federal-reserve-data-2013-9
How can CEO's boost the economy when the consumer doesn't have money to increase spending?????? And here comes Obamacare which will reduce the consumers spending power!!!!!!
The fed should have only three jobs.
1. Maintain an accurate and honest CPI.
2. Keep the real inflation rate between a deflationary 1% and 0% inflation (no more inflation). This will increase the purchasing power of the consumer. Also, this will bring real earnings to saving. If, savers can earn real income on savings, interest rates will stay low. Also, it will increase the value of the dollar. This would move money to America (an estimate 5 trillion dollars).
3. Replace the fed with a computer program ASAP
We have been waiting for the CEOs for at least 3.5- 4 years; While they have been fattening their pockets and bank accounts offshore...
And half our Nation is going to Food Banks.
I'm really impressed.
all the more to re-engage business with
realities such as revival of the economy
THEY helped crash.
When it becomes a choice of being
taxed to death or spending to bring the
system back to more life, I doubt even
the dumbest (or greediest) zillionaire will
have to reflect too far and wide.
68 accomplishments you say?....ROTFLMFAO....
#5 from the bottom..? LMAO.
DYAD:Hey bonehead, the turn around has already happened.The Dow is up over 7,000
points in 4 and a half years and we`ve had 38 straight months of job growth.What moron
have you been listening to ?
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The solid report comes a month after the retailer closed all of its Canadian operations.
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