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Outlook for the Economy & Financial Markets

Outlook for the Economy & Financial Markets. Robert Genetski Website: ClassicalPrinciples.com 312-565-0112. Outline. Economic Framework US economic weakness Financial Crisis Global Outlook: Europe, China, Japan Outlook for US Economy & Markets Take Away Points . Outline.

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Outlook for the Economy & Financial Markets

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  1. Outlook for the Economy & Financial Markets Robert Genetski Website: ClassicalPrinciples.com 312-565-0112

  2. Outline • Economic Framework • US economic weakness • Financial Crisis • Global Outlook: Europe, China, Japan • Outlook for US Economy & Markets • Take Away Points

  3. Outline • Economic Framework • US economic weakness • Financial Crisis • Global Outlook: Europe, China, Japan • Outlook for Economy 2013 & Markets • Take Away Points

  4. Outline What causes booms and busts in the Economy? 1. Keynesian framework 2. Classical framework

  5. Freedom & Prosperity Classical Economic Principles 1. Low tax rates & limited government 2. Free Markets 3. Protect individual property rights 4. Sound money

  6. Outline • Economic Framework • US economic weakness • Financial Crisis • Govt. Spending & Debt: US, Europe, IL • Outlook for Economy & Markets • Take Away Points

  7. Federal Spending & Private Spending • with regs • 2000-052005-102010-12 2010-12 • Federal Govt. Spending: 38% 40% 2% 8% • Private Spending 24% 9% 11% 8% • 2000201020122014 Annual Regulatory • Compliance expenses: $1.0 $1.8 $2.0 $2.2 • (trillions of 2010 dollars)

  8. Outline • Economic Framework • US economic weakness • Financial Crisis • Govt. Spending & Debt: US, Europe, IL • Outlook for Economy &Markets • Take Away Points

  9. Outline • Economic Framework • US economic weakness • Financial Crisis • Global Outlook: Europe, China, Japan • Outlook for Economy & Markets • Take Away Points

  10. World’s Largest EconomiesSource: IMF Share of Global Output 2013 2018 United States 18.6% 17.7% China 15.6 19.0 India 5.8 6.5 Japan 5.5 4.7 Germany 3.7 3.2 Russia 3.0 2.9 Brazil 2.8 2.8 UK 2.7 2.4 France 2.6 2.3 Mexico 2.1 2.0

  11. Government Spending as a % of Total Spending 200020132000-2013 • France 52% 56% +4 • Greece 47% 50% +3 • Germany 45% 45% 0 • UK 34% 44% +10 • Spain 39% 42% +3 • Japan 37% 41% +4 • United States 34% 40% +6 • Russia 33% 37% +4 • India 25% 28% +3 • China 17% 24% +7

  12. Net Government Debt to GDP • Greece 176% • Japan 143% • Italy 104% • US 89% • France 86% • UK 86% • Spain 79% • Germany 56% • Mexico 38% • Brazil 34% (China, Russia, India have no net debt) Source: IMF, World Economic Outlook Database, October 2012

  13. Outline • Economic Framework • US economic weakness • Financial Crisis • Global Outlook: Europe, China, Japan • Outlook for Economy & Markets • Take Away Points

  14. Factors Boosting the US Economy 2013-2014 • Banking system has substantial reserves • Fiscal agreement provides more stable tax environment • With tax hikes off the table, greater chance of slowing federal spending

  15. Factors Restraining the US Economy 2013-2014 • higher tax burdens • regulatory burdens depressing productivity • regulatory burdens depressing job creation • regulatory pressure on banks to rebuild capital and limit lending

  16. Outline • Outlook for US Economy & Markets • Spending pace: 4%-5% • Inflation: 2%-3% vicinity • Real growth: 2%-3% vicinity • Housing prices • Gold • Oil • Interest rates • Stocks

  17. Outline • Outlook for Economy & Markets • Spending pace: 4%-5% • Inflation: 2%-3% vicinity • Real growth: 2%-3% vicinity • Housing prices • Gold • Oil • Interest rates • Stocks

  18. Home prices are undervalued • 21% Based on Price to Income • 8% Based on prices vs. rental costs

  19. Takeaway Points • Odds are against economic collapse but… • US, Europe, Japan slow growth and decline in living standards • Interest rates, inflation stock prices artificially low • Avoid bonds • Consider price escalators in longer-term contracts • Growth opportunities • areas promoting economic freedom • assist increase efficiencies for your clients • help individuals maintain living standards/save time

  20. Questions or Comments Robert Genetski Website: ClassicalPrinciples.com 312-565-0112

  21. More Information?Go to: www.classicalprinciples.comFollow me on Twitter: @EconBobG Robert Genetski 312-565-0112

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