Making Sense of The Economy

The economic cycle is driven by cause and effect. Personal income drives consumer spending. Businesses respond to consumer spending by increasing production, which, in turn, requires greater investments in infrastructure and capital spending. Consumer spending, production, and capital spending all drive corporate profits.


Stock market performance is dependent on corporate profits; corporate profits also drive employment. And so, you see that job growth is at the very end of the food chain. Employment is a trailing economic indicator, and for this reason, it isn’t useful for making forecasts.

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