This week's Alpha Trader podcast features hosts Aaron Task and Stephen Alpher talking about the economy with Joe Brusuelas, chief economist at RSM US.
Politicians and market participants can't get complacent about the economy despite a string of positive reports, says Brusuelas. The economy is only operating at 80% capacity. While there have been "V-shaped" recoveries in financial services (markets), manufacturing, and housing, the service sector remains highly impaired. The result is a "K-shaped" economy, with the upward part of the K representing those select industries bouncing nicely, and the lower part of the K representing the devastating damage elsewhere.
As for another major fiscal stimulus package, Brusuelas is certain it's needed. For those who say the economy continues to rebound despite the previous stimulus running out at the end of July, he reminds that much of August's celebrated economic numbers - including last Friday's nonfarm payrolls (1.37M jobs added, unemployment rate tumbling to 8.4%) - takes data from early in the month, i.e. prior to the true effect of the exhaustion of the stimulus benefits. Brusuelas suspects that economic reports in September and October will be a far better measure of how the economy has responded to the money running out.
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