Now that the volatility in the markets has calmed down, investors are focused on the second quarter earnings season and looking abroad at other markets. Liz Ann Sonders of Charles Schwab and Company offers an overview. Doug Short uses a series of graphs to illustrate the economy’s recovery from the Great Recession. While the recovery is slow, the collective trend of economic indicators is upwards.  At the same time, the federal deficit is plunging. The month of June actually saw a budget surplus. Our final article this week discusses the trend in deficit reduction and what it means for the economy.

Calming Down… And Changing FocusFollowing a spike in volatility, markets have calmed and attention is on the second quarter earnings season.  Liz Ann Sonders, Chief Investment Strategist at Charles Schwab & Co., and her team comment on this issue plus  Federal Reserve policy and issues in Europe and Japan.

Big Four Economic Indicators: Real Retail Sales And Industrial Production- The overall picture of the US economy remains one of slow recovery from the Great Recession. As we can see in the graphs in this article by Doug Short, the rate of post-trough growth has been slower since February of 2012, although the end-of-year tax-strategy has obscured the overall trend slope over the past 17 months.

Federal Budget Deficit’s Plunge
The budget deficit has been cut by more than half…from over 10% of GDP to less than 5% today.  Excluding the government (federal, state and local) sector, the average pace of real GDP has been 3.1% over the same period. It shows that the government can and should continue to deleverage without tanking the economy, thanks to the relatively healthy private sector. This is encouraging; especially since the government sector’s deleveraging is already paying deficit dividends.

We hope you enjoy reading these articles along with us and that you find them informative.  Please forward this to your friends and family.

John R. Day, Bill Ennis and Stephanie Davidson


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