“No need to fear a recession” – The economy has slowed but slow does not equal recession.

The ISM manufacturing and non-manufacturing reports (here) this week were both weaker than expected.  Capital Economics had this to say about the status.

“Although it is very clear that the US economy has lost a lot of momentum, there are no real indications that it will soon come to a complete standstill or even go into reverse. The latest ISM surveys and various leading indicators are certainly consistent with slower economic growth, but they are not pointing to a period of negative growthThe drop in the ISM manufacturing index, to 49.7 in June from 53.5 in May, is not a recessionary signal as historically the index needs to fall to at least 47 to be consistent with outright declines in GDP.  Even that threshold may be too high as the ISM itself states that “the breakeven point…is a PMI of 42.6”

The reports, along with other high frequency economic reports including today’s labor report, seem to confirm an economy growing at a “2ish” percent annual rate.  2% GDP growth is not inconsistent with a rising stock market.  It is actually a good condition for high growth companies in that they stand out like shiny pennies.  This is good for our team of micro-cap technology companies.  I bet you didn’t recall that the NASDAQ gained 40% in 1995 – back when GDP only grew 2.01%!  Jeb Terry, Sr. July 6, 2012

Aberdeen Investment Management – a guide service for micro-cap technology investment

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