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  • "How America Lost Its Mojo" - Some Troubling Trends

    In my business, I read a lot more than the average American, in large part due to my “speed-reading” training in college. Most of what I read is about the economy, markets, financial matters, world events and yes, politics among other topics.

    I especially enjoy reading well-written articles on shifting demographic trends in the US and around the globe, which give us insights regarding what the country and the world might look like in 10-20 years. I recently read just such an article on the rapidly changing demographics in America and their long-term implications.

    After thinking about it for several weeks, I decided to reprint it for you today. I think you will find it very interesting.

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  • Sub-3% GDP Growth: A Lost Decade For The US Economy

    Whew – January is finally over! Up until the last week or so, the downside carnage in January was the worst New Year’s stock market start in history. Thanks to last week’s rebound, it was only the worst New Year’s start since January of 2009 when the Great Recession was unfolding. Still, it was a hair-raising month for stock investors. And no one knows if the damage is over.

    There are many theories as to why equity markets around the world suddenly plummeted in January. I have written about several of them in the last couple of weeks. Most market commentators, including yours truly, have pointed to concerns about China’s economy, the collapse in oil/commodity prices, the strong US dollar, Fed interest rate hikes, etc., etc. as the likely causes for the January implosion.

    Rather than continue that discussion today, I want to point out a milestone that was reached with the end of 2015 and last Friday’s 4Q GDP report – and this milestone was not a good one. With 2015 behind us, it has been a decade since we have seen 3% yearly growth in the economy. The last year we had 3% growth was 2005. Call it America’s “Lost Decade.”

    Near the end of today’s letter, I will make some suggestions on how we could stimulate our now moribund economy – starting with a significant corporate income tax cut for businesses large and small. Republicans complain that they can’t override President Obama’s veto, so they do nothing. Yet with the economy now growing by less than 1%, I think the GOP would be surprised at how much support they could get from Democrats, especially in an election year.

    Before we get to that discussion, let’s take a look at last Friday’s GDP report for the 4Q. The advance report came in lower than expected with growth of only 0.7% for the final three months of last year. The sharply lower 4Q reading suggests yet another year of weak economic growth. And there is now a controversy over how much the economy expanded last year, which I will explain as we go along.

    And finally, I am very excited to announce our latest Special Report: UNDERSTANDING & MAXIMIZING YOUR 401(K). We have worked long and hard on this Report to help our many clients and readers not only understand how their 401(k)s work, but also how to maximize their benefits. If you have a 401(k), you definitely want to download our FREE Special Report.

    There’s a lot to cover in today’s E-Letter, so let’s get started.

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  • Economy Is Improving, Yet Most Americans Are Pessimistic

    Today we tackle several issues. We start with the fact that several new surveys show that most Americans remain pessimistic about the economy and the direction the country is headed. This is despite the fact that the economy has been growing for the last five years, the unemployment rate is the lowest in seven years and the stock market has more than tripled since 2009.

    Yet despite these latest reports showing that most Americans are pessimistic about the future, the widely-followed Consumer Confidence Index has risen sharply in the last few years. Most analysts have no answer for this discrepancy. I have some specific thoughts on this contradiction, and I’ll do my best to explain it today.

    The much stronger than expected unemployment report on November 6 has sent the stock markets sharply lower in recent days, based on fears that the Fed will hike interest rates at its next policy meeting on December 15-16. I’ll offer my thoughts on what will determine the Fed’s decision next month. I wouldn’t bet money on a rate hike just yet.

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