Friday, August 29, 2008

How Would You Feel If You Were Hillary?

While Hillary Clinton must be crying in her beer at the thought of Sarah Palin receiving her consolation prize, and having the opportunity to be the first woman to break the glass ceiling and actually become the first Vice President of the US, Obama wrestles with the links to his radical past, the most damning being the unrepentant terrorist of the Weather Underground, the infamous William Ayers. The recently concluded Democratic National Convention painted America as a country whose glass is half empty, the usual liberal, excuse me, Progressive viewpoint of our nation. The Clintons, for their part, endorsed Obama's nomination, but it was most definitely a half-hearted backing, as Hillary eyes the ticket for 2012.

Meanwhile, the economy posted a 2nd Quarter GDP of 3.3%, hardly recessionary. While the housing and financial sectors are a drag on economic growth, exports and a weaker dollar added significantly to the GDP expansion. While oil and other commodities are still high, their recent selloff has definitely had a positive effect on the inflation outlook. While the National Bureau of Economic Research (NBER) defines a recession more broadly than two consecutive quarters of negative GDP growth, by using the definition of "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales, by either definition, the economy is not in recession at this point.

The markets have been trading in a several hundred point range for most of the year since they originally tanked in January. It remains to be seen if the economy can sustain the growth of the second quarter without the benefit of government stimulus. As the summer draws to a close and the election is in our face, the remainder of the third quarter and the fourth quarter are shaping up to be as volatile, if not more volatile than the last 8 months have been. Unemployment is expected to remain at 5.7%, the commodity bubble has popped, inflation is easing, the credit crunch and housing fiasco remain a drag, and we have a Presidential election for entertainment. What's not to like?

John Kaighn

Jersey Benefits Advisors