WhatFinger

Not much confidence in U.S. growth prospects for 2014.

Uh oh: Traders selling off stocks like crazy

By Dan Calabrese ——--February 4, 2014

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The left supposedly hates Wall Street, at least in its rhetoric. But that hasn't stopped liberals over the past year from seeking refuge in the relative health of the stock market compared to the rest of the economy. Look, the market is soaring! Obama must be doing great!
As the boss pointed out recently, that has little to do with the health of the economy, but a liberal is not about to be deterred by irritations like logic or intellectual honesty. They might be deterred by this, though. The early weeks of 2014 see the market tanking, and the Wall Street Journal posits that traders are not fooled by what appeared to be stronger growth in the second half of 2013. The fundamentals do not look good, and you can probably guess why that is:
Monday's market rout in the U.S. began with a weak report from the Institute for Supply Management manufacturing index for January. The purchasing managers scorecard fell to 51.3, its lowest level since May, from 56.5 in December. The weaker economic reading also coincides with the flight from emerging market currencies, which adds to investor jitters. Poor weather may have played a role, and one figure for one month may be more blip than forerunner.
The undercurrent is worry that U.S. economic growth isn't as robust as the last six months of 2013 made it appear. Our own view is that some of the biggest economic threats of recent years have faded or been absorbed—the euro crisis, tax increases in Washington. So barring a surprise from China or emerging-market contagion, the U.S. should keep growing at a modest pace. Yet as Edward Prescott and Lee Ohanian note nearby, government policies are still slowing the economy's supply-side engines. The rate of new business startups is historically low as entrepreneurs face the headwinds of the government expansions of 2009-2010. New ObamaCare costs and financial regulation are weighing on business investment and job creation. One result is subpar productivity growth, which means slower gains in the U.S. standard of living.
The Journal goes on to note that both parties are more focused at the moment on measures to deal with "income inequality," with nary a thought in sight to boost economic growth. The market notices that too. Annualized growth during the Obama presidency has been mired around the sickly level of 2 percent, and the Obama Administration is more interested in trying to spin that as an impressive performance than they are in embracing policies that would actually give us healthy growth.

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Dan Calabrese——

Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain

Follow all of Dan’s work, including his series of Christian spiritual warfare novels, by liking his page on Facebook.

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