Innovest Market Commentary for June
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Mixed signals from the U.S. economy continued into June, leading many to be frustrated by the glacial pace of economic growth. James Carville, Bill Clinton’s 1992 campaign manager, once famously stated: “It’s the economy, stupid.” Indeed, in 2011 it is still about the economy. The tepid rate of recovery in the U.S. captures the collective mood of our country as we head into the summer months: political and economic ennui. Consumer confidence in June, according to the latest University of Michigan survey, dropped to 71.5—lower than expected. A Washington Post-ABC News poll in June indicated that American disapproval of the economic policies of the President and Congress is at an all-time high.
The slow growth recovery is not a surprise. The recession we experienced in 2008 and 2009 was fundamentally a financial one. The IMF writes that over the past half century there have been 122 recessions worldwide, including 15 that were associated with a financial crisis. Recessions associated with financial crises are typically longer and more painful than average. Notably, these recessions are also followed by weaker economic recoveries.
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