Salient to Investors:

All indicators that have a number attached to them are seemingly pointing to a better economy. Unemployment is dropping. GDP is growing, housing is recovering, the Dow has more than doubled in just over 4 years.

There is still too much stimulation required. Record low interest rates are at levels the Fed would only use during a very bad economy. The unemployment rate has mainly been falling because potential workers are dropping out of the workforce, far more than because of the creation of new jobs. The labor participation rate peaked in 1979, was 67.3% in 2000 and is now at 63.3%. The under-employment rate is in the 14% range.

Housing is still weak because in many markets, price levels are stagnant or continuing to fall, despite mortgage rates below 4%.

Job creation is weak outside government, education and healthcare, and job security seems non-existent.

Fiscal cliff tax increases have yet to be fully felt in the economy, and the federal government continues to run on trillion-dollar deficits – not the stuff of booming economies.

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