Tuesday, July 01, 2003

In 'News of the Weird" today, it turns out that
The stock market has posted its best quarterly performance since the end of 1998, producing the most encouraging rally since the long slide began in 2000. Although the market slipped slightly yesterday and has been drifting lower since mid-June, an overall climb of 14.9 percent in the Standard & Poor's 500-stock index for the three months ended yesterday was the eighth-best quarterly performance since World War II.
Stunning. The eighth-best quarter in fifty years?!?! Based on what?? We don't have the preliminary GDP figures for 2003:II yet, but the US economy would have to have been on fire -- at least 4% growth if not more -- to justify such a jump. The six months ending March 2003 had experienced just 1.4% growth annualized, so a leap up to 4% would indeed be a rocket shot. Likely?

How about the record US federal budget deficit? Or the record US current account deficit? Or the record house foreclosure rate? Or continuing disinflation (creeping deflation?)? All these trends from 2003:I must have been radically reversed in 2003:II. Maybe I just missed it.

Or maybe this is all fueled by loose monetary policy and speculation? Maybe?


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