After the latest display of Congressional dysfunction, will the economy flatten out, or not? Evidence is mounting that there won’t be much effect. Chrysler reported that people kept buying trucks – even more trucks than expected in fact. Factory indices show expansion in October (not just in the US but overseas as well). While the jobs report was pale, that’s no different from we have seen in the recent past. And although third quarter earnings results are hit and miss, with many companies reducing their forecasts and causing big price downdrafts for individual companies, that hasn’t prevented stocks overall from continuing to gain. We think the economy’s staying power is intact, albeit at a slow-growth speed. This low gear growth contributed to the Fed’s decision to put off the taper.
The upcoming holiday season will be a great litmus test for consumer sentiment, and possibly, for the tenor of 2014. Stay tuned.