18 Jun 2004 A Steamroller Economy In the Making?

This week produced a huge number of economic reports, in part because some were delayed from last week’s day of national mourning.  For the most part, the reports showed substantial gains in both the momentum and the breadth of this economic expansion.  Not only is it real, it appears to have significant staying power.  Here are some of the highlights:

 This economy is firing on all cylinders without significant inflation.  The Fed has promised to do what is necessary to contain it if it becomes a problem, but for now it looks like clear sailing.  Investors expect a ¼ point increase in rates when the Fed meets again at the end of this month and a 1% increase by the end of the year.  These increases should have essentially no impact on the stock market as they are well anticipated by investors.  Of course, the risks of future terror attacks here or abroad against American interests, continued violence inIraq, and further instability in the oil supply will continue to dampen market performance.  But the proven resilience of this economy reinforced with continuing corporate earnings performance suggests better times for stock investors.