Economic Forecasting & Consulting

The Laufenberg Quarterly website provides analysis of economic conditions by Consulting Economist Daniel E. Laufenberg, Ph.D., for professionals in the financial industry. At the core of this analysis is the Laufenberg Economic Quarterly (LEQ), which offers a detailed discussion of the outlook for the U.S. economy that is updated four times a year.

Economic Perspectives
"Is the great American job machine finally broken?"
(December 3)

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November 2011 Quarterly Report

Economic Commentary & Updates to the Quarterly Reports
"A good finish to 2011 but still not good enough" (January 27)

LQ Stock Allocation Indicator
(Jan 11 , 2012)

Health Care Essay No.3 - Budget Deficits

In the November 2011 issue of the LEQ:

Still cautiously optimistic

• The economic news since the last Quarterly was published has been dominated by the debt “crisis” in Europe and the fear of it causing another global recession. Even a better-than-expected growth rate for the U.S. economy in the third quarter was dismissed as a one-off event and did very little to erase the pessimism. In fact, the consensus forecast for the rest of this year and early next year is still very disappointing. Although my forecast for real growth has been revised slightly lower than it was in August, it remains far more optimistic than the consensus.

• The first half of 2011 was much weaker than expected thanks to a sharp drop in government spending owing to local government budget pressures, parts shortages due to a major earthquake in Japan, and to a sluggish consumer sector owing to higher prices. As expected, these factors proved temporary. In the third quarter, real government spending was unchanged, while both factory output and real consumer spending rebounded from the preceding quarter.

• The outlook for real growth in the fourth quarter is at least equally favorable, despite all the noise around debt issues here and abroad, as well as the flooding in Thailand. In particular, based on the October employment report alone, total hours worked have already increased dramatically in the fourth quarter, favoring a solid gain in real GDP. Indeed, the historical relationship between hours worked and real GDP, even though far from perfect, suggests that real GDP growth in the fourth quarter could very easily exceed the better-than-expected pace in the previous quarter.

• In 2012, the outlook remains favorable, with real GDP expected to grow in excess of 3.0 percent and inflation to remain relatively benign. This too is considerably better than the consensus outlook for next year.

• My outlook for interest rates has changed. I now expect the Fed to wait until late 2012 before it starts to remove its accommodative policy stance. This is earlier than the Fed said it would act, but I doubt that the Fed can wait until the middle of 2013.

• Despite ongoing volatility, equities and high-yield bonds are still preferred over high-grade bonds. Of course, so far this year, the best performing sector has been high-grade bonds across the board, with riskier assets lagging considerably. Given my outlook for the economy, I doubt that will continue to be the case in 2012.

Go Here for the full economic report

Economic Commentary & Perspectives

The website also provides regular commentary on various economic data releases, as well as an occasional comment on markets. This is most often updated during the months between the quarterly.

Special Reports:

Occasionally, I will post to the website more detailed reports on various changes in policy, structure, or regulation, focusing on their impact on the economic outlook. The latest special report is a series of four reports on the health care legislation enacted recently.

Persons and firms interested in receiving the Laufenberg Economic Quarterly and other services of Laufenberg Economic Reports should email us at:

Reports@LaufenbergQuarterly.com

Go Here for more information about Daniel Laufenberg

 

 

 

 

 

 

 

 

 

The views expressed here reflect the views of Daniel Laufenberg as of the date referenced. These views may change as economic fundamentals and market conditions change. This commentary is provided as a general source of information only and is not intended to provide investment advice for individual investor circumstances. Past performance does not guarantee future results.