September 30, 2011 - At Quarter’s End…
As we end the 2011 third quarter, U.S. personal spending was .2% higher in August (July was revised to a .7% increase), with no material change in the level of new unemployment claims.
The S&P is down about 12% for the quarter. However car sales are running at about a 12 million unit sales rate and the U.S. economy has added 2.6 million jobs since 2010; however, despite the unemployment rate, U.S. economic growth is dependent upon jobs creation, which of course will increase consumer spending and all related economic components.
In the EU, inflation has increased to a rate of 3% which now presents a new challenge for the ECB, in addition to solving the debt challenges of Greece, Italy, and additional countries.
With the 2011 third quarter equity markets returns (including in emerging countries) poised to be the worst since the third quarter of 2008, many economists are forecasting stability in the U.S. and a mild recession in the EU. Significant valuation gains for long term investors then could occur when the EU debt challenges are addressed and as the U.S. continues modest improvement.
The second quarter now begins, with a closely watched Sotheby's auction in Asia this weekend and a major art and cultural event at the Pennsylvania Academy of the Fine Arts' Lenfest Plaza (both a measure of consumer sentiments) - and Major League Baseball.