Jul 20, 2014

Jim Paulsen: "Confidence is still too low" for a recession

The U.S. has a large “confidence gap.” Most confidence measures are still only average by postwar standards. In our view, confidence is typically the central catalyst for a recession. When economic players become confident they engage in the type of excessive behaviors which necessitate a recession. It takes confidence to over-spend, over-borrow, over-lend, over-build, over-hire, over-tighten (the Fed), or over-invest (in risky assets). None of these behaviors are yet evident because confidence is still too low.

~ Jim Paulsen, Wells Capital Management, "Economic and Market Perspective," July 10, 2014

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