Party On, America

by Rick Ackerman

We’re all bulls now, albeit with one foot planted on the fire escape. Thursday’s rally pushed the Dow Industrials and the S&Ps to yet another record high, even as U.S. productivity continued to sag, corporate earnings fell for a fourth consecutive quarter, and some of the biggest, savviest retailers in the country — Macy’s now leading the way — were wondering how they’ll survive. For a nation that generates two-thirds of its GDP from consumption and which is hard-wired to shop, the bleak picture for brick-and-mortar retail would ordinarily be regarded as a yellow flag for investors. Not this time, though. The central banks are operating at full-steam, new-car deals have helped push household debt to levels not seen since 2006, and inflated home prices — Alan Greenspan’s favorite source of ‘wealth’ — are within an inch of heights achieved just prior to the 2007-08 crash. We have no doubt that the stock market will eventually succumb to gravity, ending all of the giddiness. In the meantime, it’s all too clear that Americans, especially those in close proximity to Wall Street, will continue to party on.

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