Stifel's Case Against The U.S. Economy: Financial Advisors' Daily Digest

by: SA Gil Weinreich

Summary

Stifel’s chief economist lists a lengthy inventory of woes afflicting the U.S. economy.

More on MetLife: University of Chicago professor says government’s case against the insurer boils down to its ability to sell assets which would, naturally, lower asset prices.

Two SA contributors critique Bill Gross’s Barron’s interview.

Yesterday, we brought to your attention Vanguard's perspective that 2% GDP growth is actually healthy and sustainable. That seemed newsworthy, as much of the commentariat and seemingly much of the public have questioned the worth of the tepid economic recovery for seven years running. Today, we present a pretty thorough going case against the U.S. economy from Stifel chief economist Lindsey Piegza.

It's anything but sanguine about just 2% growth, "printed money," high debt, pension liabilities, masked unemployment and much more. Piegza prefers "realistic" to "pessimistic" in describing her stance, though she laments that the charged election guarantees these problems won't be addressed any time soon, and only then after a "very hard left" or "very hard right" turn.

Here's a brief excerpt:

"From a national standpoint you're looking at about a $16 trillion economy with a roughly $18.5 trillion in debt and a $3 trillion budget. We're currently financing that interest payment at 2.7 percent. But if you're just holding everything stagnant, and if the Federal Reserve raises rates, say, 100 basis points….and with an economy growing at just 2 percent, that additional burden may be enough to shave maybe half a percentage point, maybe more off [GDP], further driving businesses and then workers overseas."

And below, more news and opinion for advisors today:

  • The usually more circumspect IMF continues its warnings about world leaders sleepwalking toward a new economic crisis.
  • Looking to reduce your income taxes? Switch states!
  • John Cochrane says government tagged MetLife a SIFI because it might "sell assets," thereby lowering their prices.
  • Why Bill Gross is wrong but borrowing is right.
  • Roger Nusbaum also reviews Bill Gross's Barron's interview.
  • How taxes eat into your alpha.
  • What we can learn from entrepreneurs.

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