It is crucial that you are aware of the economy, have professional insight and views and know what type of atmosphere your potential clients are up against. This week I was sent the following economic summary for 2010. This opinion and commentary is provided by Allianz Life, whose experts manage over $90 billion in the U.S. as of December 31, 2010.
“In December, equity markets were strong and long-term interest rates rose due to massive fiscal stimulus in the form of tax cut extensions, unemployment insurance extensions, and relaxed business investment deductions. Altogether, this new fiscal stimulus should add roughly 1% to 2011 GDP growth – and this fiscal stimulus is in addition to the significant monetary stimulus (quantitative easing 2) announced in November. December was a historic month for fiscal stimulus, and this is positive news for risky assets.
These fiscal and monetary stimulus actions are designed to spur near-term economic growth and increase the risk appetite of investors, but this comes at the expense of worsening the deficit and debt situation of the U.S. government.
Looking beyond the expected good growth story of 2011, the U.S. faces troublesome structural issues, such as massive debt levels, elevated baseline unemployment, and the risk that investors will downgrade their assessment of the credit worthiness of U.S. Treasuries and/or flee the dollar for opportunities in healthier countries. Actual inflation is expected to be tame in 2011, but the potential for elevated levels in future years is meaningful.”
» Read the full December Economic Summary HERE (954K PDF)