Most of us are aware of Harry Truman’s request for a “one-handed economist” after hearing repeatedly when asking for advice, “on the one hand…, but on the other hand….”
For about a year now, however, economic data, flows, and trends have oriented debates around the same idiom: on the one hand, Greece should stick with the Euro, but on the other hand, perhaps they should break away. On the one hand, growth out of China might be much less than 7%, but on the other hand, China might surprise us. On the one hand, the Fed raising the interest rates will be a good thing, but on the other hand…
In looking in detail through JP Morgan’s Q3 2015 “Guide to the Markets,” which highlights various economic and investment-related data, we find plenty of “one hand or the other” points. For example:
- On the one hand, M2 Money Supply is at a record 66.5% of nominal GDP, and total money supply at a whopping $11.4 trillion, (page 66 of the report); on the other hand, core CPI is at 1.7% compared to 4.1% for the historical fifty-year average (page 27)
- On the one hand, corporate cash represents over 30% of total corporate current assets, up from just over 20% in 2008 – a 50% increase (page 15); on the other hand, growth in investment in fixed assets is hovering around the long-term average.
- On the one hand, average U.S. GDP growth over the long run has been 2.9%; on the other hand, recovery from 2009 shows an annual average of just 2.2% (page 18 of report) and estimates for future increases in numbers of workers and productivity indicate that even 2.2% might be aggressive (page 22).
So what does this all mean? Ambiguity for some time to come. At most major junctions, with no clear sign upward or downward, we continue to focus on detailed reviews of the core economic data and political developments with the intention of getting an early look at upcoming meaningful trends. In the meantime, we continue to maintain active conversations with industry specialists (business services, consumer/retail, distribution, energy, healthcare, manufacturing, software/technology), looking for the anecdotal series of stories from experts that might help to round out some conclusions on industry and economic trends.
If you have an anecdote or story to share, please do so here. Or, if you are interested in engaging others in this conversation, please forward this newsletter or see the “join the conversation” section below.
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