“A disappointing jobs report brought on questions about the velocity of our economic recovery. There is no doubt this recovery had been substandard. The “why” can be debated. 115,000 new jobs was well below consensus estimates. That being said, one number does not make a trend and the past few months have come in better than expected. My concern is that expectations are low and this stimulus-induced recovery lacks steam.
Concerns over Greece and France stoked up this weekend. It appears that the Greeks are not going to hit austerity targets required to receive bailout money from the EU. In France, President Sarkozy’s loss to Francois Hollande could threaten the future stability of the EU. France has been Germany’s biggest ally in keeping the EU together by funding bailouts to other more indebted member nations.
The future of Europe looks worse today than it did last week. There are no proposals on the table to structurally reform their economies and there is a heightened demand for governments to continue to overspend.
Even in the US there is a major aversion to austerity. Some renowned economists are now speaking out against spending cuts stating that it will derail the economic recover. I agree that spending cuts will hurt economic growth. But if the vast majority of your recovery is stimulus induced do you really have a recovery? We are sacrificing tomorrow for today instead of actually addressing our issues. But that is a whole other conversation.”
(Every Tuesday morning, ProBizMS will be checking in with Pinnacle Trust’s Jeremy Nelson on what the market has done, is currently doing and Nelson’s thoughts on the coming week as well as other topics pertinent to the economy. Nelson’s comments are not meant to be construed as financial advice; the weekly posts will retain the flavor of an informal interview/conservation. Nelson currently serves as Chief Investment Officer for Pinnacle Trust located in Madison, MS. Nelson’s primary role is working with clients to create financial strategies that help them achieve their life goals. He also chairs the Pinnacle Trust Investment Committee, where he reviews and directs the firm’s investment process.)