Edward Devlin / NASDAQ-NYSE-AMEX Model   Name: United States Description: US Economy Author: Chris Devlin   Economic Analysis     1. Importance Very important   It is very important to consider the US economy when making investment decisions. The US economy is the largest in the world. About 75% of the economy is driven by consumer spending. 2. Wisdom Important   If consumer spending is increasing, the US economy will likely do well. If consumer spending is decreasing, the US economy will find it difficult to do well. 3. Knowledge Important   If the US economy is growing more than 3.0% a year, that is a good signal and a great opportunity to own stocks. If the US economy is growing between 0.5% and 3.0% a year, it is more challenging to own stocks. If the US economy is growing less than 0.5% or is shrinking (negative growth), it is more prudent to have the majority of your holdings in cash or bonds. 4. Current Assessment Fair   The current assessment of the US economy is fair. High unemployment, numerous home foreclosures, large budget deficits, lack of political will to solve large financial problems, major wars, and rapidly accelerating healthcare costs are pulling the economy down. Low interest rates and low inflation rate make an economic recovery more likely, but are not enough in and of themselves to facilitate an economic turnaround. Consumer spending continues to be tepid. Higher oil prices caused by unrest in the Middle East and the economic fallout from the disasters in Japan (earthquake, tsunami, nuclear disaster) make a solid and strong recovery unlikely. 5. Future Assessment Fair   The greatest probability of the US Economy given all the dynamics is for it to barely continue in a Fair growth cycle of something greater than 0% growth. The risk of a double dip recession is growing, though.     Future Assessment Probabilities, Reasons and Explanations      Possible Outcome Probability Value Reasons and Explanations 1. Awesome   10% >16% The housing market rebounds strongly, budget deficits are reduced, people find jobs, and inflation remains low. 2. Good   10% >10% The housing market rebounds, budget deficits are flat, some people find jobs, and inflation remains low. 3. Fair   50% >4% The housing market is soft, budget deficits are grow slowly, unemployment stays high, and inflation remains low. 4. Bad   20% <-4% The housing market is soft, budget deficits are grow significantly, unemployment gets worse, and inflation remains low 5. Terrible   10% <-9% The housing market is very soft, budget deficits grow significantly, unemployment passes 10%, and inflation / deflation picks up significantly

Key Performance Indicators

Key Performance Indicator Importance   Current Assessment   Future Assessment   1. Consumer Durable Goods   Important   Fair   Fair 2. Economic Cycle   Very important   Fair   Good 3. Gross Domestic Product (GDP)   Very important   Fair   Fair 4. Inflation Rate   Very important   Awesome   Good 5. Interest Rates   Important   Awesome   Awesome 6. LIRA - Leading Indicator of Remodeling Activity   Important   Fair   Good 7. Personal Income   Important   Good   Good 8. Unemployment   Very important   Bad   Bad

Linked Entities

Industry Importance   Current Assessment   Future Assessment   1. Consumer Services   Important   Good   Good 2. Finance   Important   Fair   Fair 3. Technology   Important   Good   Good 4. Consumer Durables   Important   Good   Good 5. Public Utilities   Important   Fair   Fair 6. Basic Industries   Important   Good   Good 7. Energy   Important   Good   Good 8. Capital Goods   Important   Fair   Fair 9. Health Care   Important   Fair   Fair 10. Miscellaneous   Important   Good   Good 11. Consumer Non-Durables   Important   Good   Good 12. Transportation   Important   Good   Good 13. Funds   Important   Fair   Fair 14. Alternatives

Associated Information

Economic Cycle, Industry Cycle, Market Cycle

Economic, Sector and Market cycles superimposed

Hottest Sectors for 2011 - CNBC - 15 Dec 2010

US Stock Outlook for 2011 - CNBC - 21 Dec 2010

US Economic Outlook - 5 Jan 2011

Get Bullish on US Stocks? - CNBC - 7 Jan 2011

Strong Dollar, Oil and Gold - Yahoo Finance - 09 Dec 2011

Linked Portfolios

Beverages (Production/Distribution) - Top 10

Coal Mining - Top 10

Environmental Services - Top 10

Major Chemicals - Top 10

Oil & Gas Production - Top 10

Precious Metals - Top 10

Water Supply - Top 10

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