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Investing Specialists

Government Stinginess

A lower deficit is great longer-term news, but it could continue to hurt short-term data.

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While the retail sales report started the week off on a highly positive note, the data was all downhill from there. Industrial production, housing starts, initial unemployment claims, and the Consumer Price Index all suggested a slowing economy.

I thought the news this week might just be bad enough to knock off even the most complacent bulls, but I was sorely mistaken as the market posted hefty increases even in the face of some pretty ugly data. However, continued rumors of more quantitative easing throughout the world seemed to keep things afloat for yet another week. On the other hand, new government reports and forecasts suggest that the fiscal noose around the U.S. economy's neck continues to tighten at an exceptionally rapid pace.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.