I just wanted to lay out some of the arguments I've seen and see what everyone thinks. I really can't make sense of what's going on. What say you?
UPDATE: For some reason I can't view anyone's comments right now...probably just a temporary glitch, but thanks for your input, and hopefully the page still works fine for everyone else!
The double dippers say:
- May employment numbers fell way short of expectations (41,000 new jobs created vs. 190,000 expected). Retail sales fell unexpectedly in May. Businesses still reluctant to hire. Housing market still struggling
http://finance.yahoo.com/...
- Euro debt crisis threatens the credit market
- US broad M3 money supply growth has turned sharply negative, which historically precedes downturns
- The Economic Cycle Research Institute weekly leading indicator has slid sharply in recent weeks
- Commodities are falling, signaling deflationary pressures
http://finance.yahoo.com/...
- The fiscal stimulus is winding down
http://online.wsj.com/...
- Bush tax cuts set to expire so income from 2011 is shifted to 2010 (I think this one's just a conservative talking point)
http://www.google.com/...
- Stronger dollar will decrease exports
http://www.newsweek.com/...
- Current situation reminiscent of mid-1970s, when the Dow fell by 50%, gained back about 75% of its value in the next 15 months, then (due to deficit spending and inflation) lost 30% in the next 2 years
The no double dippers say:
http://preview.bloomberg.com/...
- There's little inflation so the Fed has leeway to keep rates low
- Manufacturing has been posting consistent gains
- Conference Board's leading economic indicator for May will increase again after a drop in April
http://online.wsj.com/...
- Double dips have been historically rare since the Great Depression
- One month's employment numbers (May) do not make a trend
- The labor market is weak enough (there hasn't been enough transition from temp to full time jobs) that essentially, it's not likely to get much worse even if demand falls
http://blogs.wsj.com/...
- Gas prices are stable (unlike in the 1970s)
- Consumer spending is still on an upward trajectory
http://blogs.wsj.com/...
- Positively sloped yield curve spread of 3.2% is a good sign
http://www.slate.com/...
- Slight tapering off of growth spurt is natural, worries have a lot to do with market psychology