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PostPosted: Fri Apr 29, 2011 10:43 am 
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So the numbers are in, and in the first quarter, GDP grew by 1.8 % - extremely low, especially since the US is supposed to be in the "bouncing back" phase. Typically, recessions are followed by fast growth as the GDP bounces back, but something is pushing it down.

Also, the Federal reserve is about to end the second stage of the quantitative easing (lasts until june 2011). That is, after june 2011, they will print considerably less money, causing the economy to slump again since newly printed dollars is really the only thing that is keeping growth positive right now. That is not to say that printing money is good - it's terrible, but it can inflate the growth numbers temporarily. When they stop doing it, whatever small growth there is right now will disappear and the recession will be back.

Well... on the positive side, this means Obama will lose in 2012. Another recession, under his watch, despite all his stimulus? That's gonna be hard to explain. Hey, I bet even Sarah Palin could come within single digits of him if it turns out that way ;)

This is certainly important in helping Gov. Huckabee make up his mind; Obama has hardly seen this beatable before. I think after Trump (who is melting away quickly), the GOP voters will have lost its taste for bombastic candidates and will be looking for someone more serious. The odds, therefore, are good.

That's just a silver lining obviously; this is still bad news of course, especially for the unemployed.



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PostPosted: Fri Apr 29, 2011 10:53 am 
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http://online.wsj.com/article/SB1000142 ... on_LEADTop

Great article on the subject.


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PostPosted: Fri Apr 29, 2011 1:50 pm 
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Can someone explain to me why the stock market is going up rather than down with this news? It boggles my mind that it is as high as it is with our country and states going further and further in debt, unemployment and inflation both high, and being involved in three wars. :?

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PostPosted: Fri Apr 29, 2011 2:03 pm 
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GrannyT wrote:
Can someone explain to me why the stock market is going up rather than down with this news? It boggles my mind that it is as high as it is with our country and states going further and further in debt, unemployment and inflation both high, and being involved in three wars. :?


My guess is it is fueled by oil going up and probably construction and home improvement that will be doing lots of business after these storms.


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PostPosted: Fri Apr 29, 2011 3:23 pm 
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Granny T, let me take a shot at explaining it (although it's hard even for me as a finance student).

Just because companies profits grow, doesn't mean they'll add workers. This is known as a "jobless recovery"; when companies won't hire because they feel insecure about the future (hiring is a long-term decision), despite having decent profits right now.

Also, the stock market is all about expectations; if shareholders believe a company is going to make a really low profit, the share price is going to fall even before the company has announced how much profit it has made. Then, if the company announces a higher profit than the shareholders expected, the share price will bump up again.

So if expectations were really low before 2011, and companies are now beating the expectations, that means a positive stock market return.

Hope you understand :)


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