Manarin Investment Counsel advisors Tom Kerins and Tim Bastian share their thoughts on a handful of financial topics.

While most economic pundits think we will see a slowdown in consumer spending this year,  signs are pointing that chances are good we will see spending move in the opposite direction.  Here’s why:

(1)  Consumer incomes are rebounding.

(2)  Consumers have reduced their financial obligations.

(3)  The personal saving rate is higher.

(4)  Home building is rising again.

(5)  Autos still selling slower than the scrappage rate.

- From economists Brian Wesbury and Bob Stein in this Research Report.

Aron and I had a good chat with Joe Ruff recently at the World-Herald on what has taken place during the last 18 months in the market and economy. 

Click here to read the full article.

GDP for the third quarter was released.  Real gross domestic product was up 3.5% at an annualized rate.  Let’s compare that to the first quarter when it was falling at a 6.4% annualized rate.  So in other words, from the trough to where we are today, we have a 9.9% swing in economic activity.  That is a V-shaped recovery. 

That’s economist Brian Wesbury in his recent Wesbury 101 video on why we appear to be in the midst of a V-shaped economic recovery.  Later he says why the government’s stimulus spending has hurt this process:

… every dollar the government spends it has to tax or borrow from someone else which means they can’t spend it.  I believe the more the government spends, the more they take from the private sector, the slower economic growth is.  In other words, what I’m saying is the economy would be even stronger today if it weren’t for the stimulus spending.  

And finally, he touches on the error being made by conservatives in Washington:

Today they’re on the defensive.  They’re trying to argue that GDP was not good, that it was only because of Cash for Clunkers and only because of the First Time Home Buyers Tax Credit that the economy is growing.  And once those go away, in fact the economy will slow down and we’ll find out that things aren’t really as good as they should be.  This is a strange place for conservatives to be in.  I think they’re making a big mistake in this argument because the economy is highly likely to stay strong for the next 12 to 18 months.

I can’t say there is much here to disagree with.

Brian Wesbury and Bob Stein, both economists at First Trust, offer outlook on a few key economic topics.  Here’s a handful of grafs I’ve pulled from their recent article that you won’t hear from the media establishment:

• New home sales have risen for five straight months.  Existing home sales are up in four of the last five months – and given strong figures on pending home sales in August – should be up substantially in September.  After declining for 39 straight months, private construction of new homes increased for the third straight month in August.  Meanwhile, home inventories are falling and given the low level of construction will continue to do so in the months ahead.
• On consumer confidence, the small decline in September followed a large increase in August.  And now that private-sector wages and salaries are starting to rise again, we think consumer optimism will start to trump pessimism in the months ahead.
• On auto sales, everyone knew auto sales in July/August were artificially high due to “cash for clunkers” and September would show a large drop.  The only issue was how deep the drop would be.  Though the September drop was larger than anticipated, we take this as a sign that a greater share of the sales that the clunkers law robbed from future months came out of September, meaning October and beyond will show less of a “clunkers” effect and higher rates of sales.
• On the employment situation, we like to focus on what’s happening in the private sector.  Private payrolls fell 210,000 in September, a bit larger than the 182,000 decline in August.  But this happened back in June when payrolls fell 391,000, a bigger drop than in May when they fell 292,000.  Stocks weakened on the June jobs report, but then strengthened as corporate profits showed larger than expected gains and economic data continued to improve.

Economist Brian Wesbury at First Trust makes a convincing case that we are in this video.

A few years back Brian Wesbury was named the #1 economic forecaster by the Wall Street Journal.  Check out his latest article on economic growth which a shares a viewpoint that we strongly agree with.

Here’s Brian Wesbury and Robert Stein with more antidote medicine to overcome the News Media Negative Virus.