This article is for informational purposes only. This article is not intended to provide tax, legal, insurance or other investment advice. Unless otherwise specified, you are solely responsible for determining whether any investment, security or other product or service is appropriate for you based ...
This commentary is for informational purposes only. All investments are subject to risk and past performance is no guarantee of future results. Please see the disclosures webpage for additional risk information. For additional commentary or financial resources, please visit www.aamlive.com/blog.
The household balance sheet remains the primary concern with regards to the economic recovery. The latest data from the Federal Reserve on consumer credit showed the first expansion in credit in 12 months. While many view this as a positive I remain skeptical of the sustainability of the recovery. Total consumer credit expanded to $2.46T in January. Unfortunately, this is exactly what the consumer shouldn’t be doing right now and substantially increases the risk of a stimulus withdrawal resulting in a double dip in 2011 or 2012. At the same time we are beginning to see signs of life in consumer sales – another potentially negative omen for the wobbly recovery. While all of this might appear to be a positive at first glance it substantially increases the risk of a double dip . Allow me to elaborate. Fitch recently reported that the charge-off rate for prime credit cards remains at its highs: Fitch Ratings-New York-03 March 2010: U.S. credit card charge-offs surged to near record levels set last fall, according to the latest Credit Card Index results from Fitch Ratings.
U.S. Global's John Derrick believes that loose monetary policy will prevent another recession, but that we should prepare for middling 1.5% or 2% growth.
Despite a series of economic reports pointing to a continuing anemic recovery, Research Affiliates founder Rob Arnott believes the odds of a double - dip recession remain above 50%.
Odds of a double dip are elevated given the current stage of the business cycle, says Vanguard's chief economist, but the indicators are holding. Plus, Davis addresses positioning your portfolio for eventual inflation.