Weak Dollar Weakness?

The US Dollar has recently been hovering at historically low levels compared to the last several decades. Don't let that dent your pride in the stars and stripes though. Dollar devaluation entices other countries to buy American goods, driving up our exports (as an important component of our GDP) and ultimately boosting growth in our economy. Higher growth should eventually lead to corporate hiring and hopefully a sustainable recovery. While a weak US dollar isn't a panacea, adding a little water and sunlight to our economy can only help.

Trouble in the Euro-zone

This is a great illustration from Mint showing Euro-zone public debt as a percentage of GDP. You can easily see why the PIIGS are in trouble.

Q3 GDP Revision

This morning, the revised Q3 GDP (Gross Domestic Product) data was released. After revisiting the numbers, the Commerce Department lowered their initial growth estimate of 2.5 % down to an even 2%.

In economic theory, Okun's law describes the relationship between quarterly changes in GDP growth and quarterly changes in the unemployment rate. Generally speaking, reduction in the unemployment rate trails GDP growth by about 2%. Therefore, with the current economy displaying anemic growth of 2%, the unemployment rate will remain at 9% for the near term.

After digesting this information, the stock markets opened modestly lower.

Source: TaintedAlpha.com


Following a GDP growth reading of 1.3% for the second quarter, growth of 2.5% would have been a large jump.