Even the most diehard fiscal conservatives understand the negative impact to the economy if we go over the fiscal cliff.
New York, NY (PRWEB) August 21, 2012
John Thomas Financial Chief Economist, Mike Norman, sees U.S. economic growth picking up through the remainder of the year. "With housing perking up and auto sales remaining robust, we think third quarter GDP can come in around 3.5% with the fourth quarter even higher," says Norman.
In addition, Norman sites stronger job growth and gains in personal income. Moreover, the negative effects of Europe are abating, and we now see some evidence of improving economic activity in the Eurozone. Regarding the "fiscal cliff," Norman sees that as political brinkmanship, but does not think the U.S. is going to fall off the edge. "Even the most diehard fiscal conservatives understand the negative impact to the economy if we go over the fiscal cliff," said Norman. "So I don't expect it to happen."
Norman believes that Congress and the president will reach some agreement to avoid plunging over the edge, but added that even if we do go over, the subtraction from GDP won't be enough to push the economy into negative territory. Markets have probably already discounted much of the impact of the fiscal cliff, he says.
As for interest rates, Norman thinks we probably hit a cyclical low in bond yields earlier this month. "I see bond yields moving a bit higher as growth forecasts are revised up," he stated. "But the Fed is still likely to remain on hold as long as the unemployment rate stays above 8-percent." Norman does caution that geopolitical factors remain a potential threat to the global economy. "Mostly we're talking about a possible military strike on Iran by Israel or the U.S. That would cause oil prices to spike and it could send us back into recession."
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About John Thomas Financial
John Thomas Financial, a member of FINRA and SIPC, is an independent broker-dealer and investment banking firm headquartered in New York City's Wall Street district. Emphasizing a client-centric approach to managing all aspects of its business, John Thomas Financial and its affiliates offer a full complement of retail brokerage, private wealth management, and corporate advisory services tailored to the unique needs of its clients. The firm publishes the Fiscal Liquidity Index, a unique daily indicator that looks at government spending and its impact on the financial markets, as well as The John Thomas Financial Economic Outlook, a research report analyzing consumer sentiment, market outlook, credit cycles and dozens of other market influences. For more information on the firm, please visit: http://www.johnthomasfinancial.com.
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