The US stock market as measured by the MSCI US Broad Market Index is up 2.4% for the week. The S&P is up the same and the Dow is up 2.3%. Various economic reports released this week proved considerably stronger than expected, boosting the outlook for stocks. Wednesday was a particularly good day, when it was reported that private employers added more jobs in November than previous months and the Fed’s Beige Book report of regional economies concluded that “the economy continued to improve, on balance” from early October to mid-November. Today’s jump in the unemployment rate so far, has not stemmed the advance. 

It has been a busy week across the country, but especially, in Washington D.C. and on Wall Street. Republicans gained over 60 seats in the House, roughly twice the post-World War II midterm average. Ben Bernanke and the Federal Reserve risked credibility again by increasing their record stimulus to buy an additional $600 billion of Treasuries through June to reduce unemployment and avert deflation. And amidst it all the S&P 500 charged to its highest level since September 2008 on strong earnings releases and speculation that the Fed will indeed stimulate growth and that banks will be allowed to raise dividends. But alas, as the presumptive Speaker of the House John Boehner said on Tuesday night, “we have real work to do – and this is not a time for celebration.” 

The economy continues to flounder with few signs of improvement in unemployment. Unemployment remains entirely too high with few prospects of decline any time soon. Housing remains in near depression as would-be buyers cannot sell their current homes or they worry about losing their jobs, or they cannot find financing. Manufacturing continues to grow, but much slower than earlier in the year, and not fast enough to create jobs. But there are at least two bright spots, (not counting the growing possibility of a gridlocked Congress forced to compromise). The consumer appears to be increasing his outlays for goods and services and the stock market continues to recover from 2008. 

The ‘green shoots’ of economic recovery characterized by Ben Bernanke in mid 2009 are withering as the housing slump drags on, unemployment remains chronically high, consumer spending remains stagnate, Europe’s debt crisis eludes resolution, state governments grow increasingly insolvent, and the economic and ecological catastrophe in the Gulf grows worse by the day. For the second time, the government revised downward their estimate of US gross domestic product from to 2.7%. The first estimate was 3.2%, followed by a correction to 3.0%. Year over year real GDF (inflation adjusted) is up 2.4%, compared to up .1% for the fourth quarter.