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Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
Midyear Economic Outlook
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Midyear Economic Outlook

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Bill Bayer, financial expert and small business coach, walks through the current economic state, projecting two possible outcomes: re-enter a recession, or continue in a slow recovery. …

Bill Bayer, financial expert and small business coach, walks through the current economic state, projecting two possible outcomes: re-enter a recession, or continue in a slow recovery.

What does the contrast between first and second quarter indicate? Will the housing market continue to rise? What happens if the European crisis continues? How does the economy affect the upcoming presidential election? What should I do with my investments and savings? How should I run my business in light of the economy? What are current unemployment rates? Does the future of our economy look better or worse?

Bill addresses questions such as these in his presentation. For more on these topics, visit his blog. www.uncommonwisdomblog.com

Published in: Economy & Finance, Business
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  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Copyright William W Bayer 2012
  • Transcript

    • 1. 2012 Economic Outlook Lighthouse Growth Resources June, 2012 By Bill Bayer
    • 2. 2012- The Paradox Economy• For four months, it seemed like the European crisis was solved, the US economy was recovering, and housing and employment were improving.• But reality returned in second quarter• The UN-Recovery persists • And threatens Obama’s re-election Copyright William W Bayer 2012
    • 3. Two Conflicting Scenarios• An end to the recovery caused by failure to resolve European crisis • Interest rates continue to fall • Europe and then rest of the world start a new recession• Or the UN-recovery continues with gradual improvements in the economy over the next 2-3 years. Copyright William W Bayer 2012
    • 4. If New Recession• Unemployment rises• Interest rates drop• Housing market stalls and possibly declines again• Gold, energy and other commodity prices drop further• The stock market declines sharply Copyright William W Bayer 2012
    • 5. If Continued UN-Recovery• Unemployment drops slowly• Interest rates stabilize and then move upward as European crisis is resolved• Housing market continues slow recovery• Gold, energy, commodity markets and the stock market will move upward slowly but be volatile. Copyright William W Bayer 2012
    • 6. Agenda For Today• Interest Rates• Europe (by country)• Inflation / Deflation• Employment• Housing• Gold, Oil and commodities• The Stock Market• The Election• Outlook for Small Business & What to Do Now Copyright William W Bayer 2012
    • 7. Interest Rates• Bond market has focused on European crisis and potential for global recession• Record low LT US Bond Interest Rates • Under 1.50% for 10 YR Treasury• Markets are ignoring LT inflation threat• Markets are saying that solution to European debt crisis and eventual US Debt crisis will be very poor economic growth• Possibility of Deflation Copyright William W Bayer 2012
    • 8. Interest Rates - f(x)• Perceived Credit Risk• Economic Growth Outlook• Inflation (Or Deflation) Expectations• Confidence in Government/ Country’s Economy Copyright William W Bayer 2012
    • 9. GDP Growth by Country – 2012/2011• Euro Area – (-0.10) / 2.40• Switzerland – 2.00 / 2.50• Germany – 1.70 / 4.70• France – 0.33 / 2.10• Greece – (-6.50) / (-8.00)• Ireland – 0.70 /(-0.20) (4th quarters)• Italy – (-1.40) / 0.80• Spain – (-0.40) / 0.80 Copyright William W Bayer 2012
    • 10. Inflation by Country – 2012 / 2011• Europe Area – 2.60 / 2.70• Switzerland – (-1.00) / (-0.70)• Germany – 1.90 / 2.10• France – 2.10 / 2.50• Greece – 1.40 / 2.40• Portugal – 2.90 / 2.70• Italy – 3.20 / 3.30• Spain – 2.10 / 2.40 Copyright William W Bayer 2012
    • 11. Interest Rates by Country – Govt. 10 YR Bonds• Switzerland - 0.54 / 1.63• Germany – 1.31 / 2.96• France – 2.56 / 3.33• Greece – 28.91 / 16.73• Ireland – 8.21 / 11.24• Italy – 6.04 / 4.79• Spain – 6.51 / 5.47• Portugal – 10.67 / 10.43 Copyright William W Bayer 2012
    • 12. Other Large Nations – 2012/2011 Interest Country GDP Growth Inflation RatesUnited States 2.00 / 1.60 2.30 / 3.00 1.60 / 2.99United Kingdom 0.00 / 0.50 3.00 / 4.20 1.65 / 3.25China 8.10 / 9.10 3.00 / 4.10 3.34 / 3.89India 5.30 / 6.10 7.23 / 7.50 8.33 / 8.24Japan 2.70 / (-0.50) 0.40 / (-0.20) 0.87 / 1.15Australia 4.30 / 2.30 1.60 / 1.80 3.07 / 5.17Canada 1.80 / 2.20 2.00 / 2.30 1.78 / 3.00 Copyright William W Bayer 2012
    • 13. Unemployment Around the World –2012/2011 (1) 2012 2011 Country Unemployment Unemployment Rate RateSpain 24.44 22.85Greece 21.90 20.70Portugal 14.90 14.00Ireland 14.30 14.30Italy 10.20 8.90France 9.80 9.80United Kingdom 8.20 8.40 Copyright William W Bayer 2012
    • 14. Unemployment Around the World –2012/2011 (2) 2012 2011 Country Unemployment Unemployment Rate RateUnited States 8.20 8.50Germany 7.40 6.60Canada 7.30 7.50Brazil 6.00 4.70Australia 5.10 5.20Japan 4.60 4.50China 4.10 4.10 Copyright William W Bayer 2012
    • 15. Inflation or Deflation?• Data from 2011 to 2012 indicates: • Lower economic growth • Lower Inflation • Interest rates higher for RISKY countries and rates have gone very low for “Safe” Countries.• Risk of world-wide recession and potential deflation is significant.• Deflation is brutal economic environment! Copyright William W Bayer 2012
    • 16. Slowest US Employment Recovery in 65 Years Copyright William W Bayer 2012
    • 17. Lowest Employment Population Ratio Since 1975 Copyright William W Bayer 2012
    • 18. Construction Employment Down 29% from Peak Copyright William W Bayer 2012
    • 19. Employment is Still Only at 96% of Previous Peak Copyright William W Bayer 2012
    • 20. Small Business Hiring Plans are Improving Copyright William W Bayer 2012
    • 21. Missouri Unemployment is at 7.2% versus 9.8% Peak Copyright William W Bayer 2012
    • 22. New Home Sales Remain Below Previous LOWS! Copyright William W Bayer 2012
    • 23. Divergence of New Home Sales and Existing Home Sales Copyright William W Bayer 2012
    • 24. Home Prices Flutter Around +/- 5% Year Over Year Change Copyright William W Bayer 2012
    • 25. Home Price Index Still Off Over 30% From Peak Copyright William W Bayer 2012
    • 26. Real Housing Prices Have Declined Over 40% Copyright William W Bayer 2012
    • 27. And Look Like a Good Deal Versus Renting - BUT Copyright William W Bayer 2012
    • 28. Housing Market Conclusions• Houses look like a good deal, BUT• Have attitudes about housing changed? • Many people no longer see rising housing prices as an excellent investment. • Lack of price appreciation makes it easy for people to postpone purchases• Mortgage availability is still tight and paperwork is punitive.• Housing grows AFTER employment! Copyright William W Bayer 2012
    • 29. The Markets• In 2012, Markets have been volatile• Up moves have been followed by sharp and quick reactions• Difficult market for investors due to lack of sustained trends• Tricky market for traders• Professionals and large institutions have lost huge $ - Example JP Morgan• Overall returns are disappointing Copyright William W Bayer 2012
    • 30. Treasury Bonds – Prices Rise / Safety Haven Purchases Copyright William W Bayer 2012
    • 31. CRB Index (Inflation) has dropped sharply (24%) Since early 2011 Copyright William W Bayer 2012
    • 32. Corn and Other Crop Prices have Moderated Or Are Falling Copyright William W Bayer 2012
    • 33. Slowing World-Wide Economic Growth has Caused Oil Price Decline Copyright William W Bayer 2012
    • 34. US Dollar has Rallied as Alternative to Euro and Due to T-Bond Rally Copyright William W Bayer 2012
    • 35. Euro is Near 4 Year Low – What if The Lows Are Broken? Copyright William W Bayer 2012
    • 36. Gold Remains in Long Term Uptrend, But has Reacted to Support at 1525-1550 Copyright William W Bayer 2012
    • 37. SP 500 has Dropped Sharply From April Highs – Topping? Or Rally Again? Copyright William W Bayer 2012
    • 38. The Election - Obama• When the economy is poor, incumbent Presidents seldom win• Obama’s handling of the economy has been weak.• ObamaCare is unpopular• Favorable Press coverage and large (and growing) Democratic(Entitlement) base favors Obama• Obama states - 221 Electoral Votes Copyright William W Bayer 2012
    • 39. The Election - Romney• Republicans, except for Reagan, generally run poor campaigns• Romney’s communication skills are poor compared to Obama• Romney needs to focus on key issues – economy, size of government, tax policy – And avoid emotional social issues (which are losers.)• Romney states - 170 Electoral Votes Copyright William W Bayer 2012
    • 40. Election Forecast• Obama needs 50 of remaining 147 Electoral Votes to Win; Romney needs 100• Midwest, Colorado, Arizona, Florida, North Carolina are key to Romney• Economic slowdown will tilt the election to Romney• Romney wins a close one! Copyright William W Bayer 2012
    • 41. Small Business – What to Do • Get ready to survive in slowing economy • Avoid risky investments • Round sales forecasts down, not up • Delay all non-sales hiring • Increase spending on effective marketing and sales activities • Cut poor performers • Build liquidity – in Business and Personally Copyright William W Bayer 2012
    • 42. If Economic Crisis Occurs• Sell all stock market holdings• Buy treasury bonds• Identify key employees and cut staff where-ever possible• Preserve cash • Cash is king in a crisis• Reduce life style expenditures• Act quickly and act quickly again to reverse positions if crisis passes. Copyright William W Bayer 2012
    • 43. Closing Thoughts• I still expect 2012 to be a good year.(I do not expect a Crisis.)• If you made money in 2011, you should make about the same in 2012.• Actively manage your business. Be alert.• Focus on improving your sales & marketing functions• Refinance if possible (last chance?)• Cut marginal people – make this an ongoing discipline Copyright William W Bayer 2012

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