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The ‘muddle through’ economy

David Brancaccio Jan 12, 2012

There’s been a steady trickle of good signs about the U.S. economy lately, which was something to keep in mind this morning. After all the talk of booming holiday retail sales, the actual numbers were up by just a tenth of a point, much lower than expected. Maybe everyone really did give cars for Christmas as the holiday ads suggest, because autos and gas were the main drivers of December retail sales.

What’s that you say? You thought everyone and their mother was buying iPads or Kindles over the holidays? Apparently sales of electronics were stronger in November than December when the finally tally came in.

Brian Gendreau is a market strategist at Cetera Financial Group. He said it seems odd, “that people would buy less in the way of electronics during the Christmas season than they would in November, Black Friday sales or no Black Friday sales.” Gendreau says many forecasters, even the really bullish ones, are expecting “fairly slow growth.”

But the stock market wasn’t all bad news today. This may have to do with Europe. Italy and Spain found some eager takers for their government bonds Thursday, meaning someone was confident enough to buy. One explanation is that with U.S. interest rates so comically low, some investors are willing to take on risk to get higher returns across the Atlantic.

Gendreau says those bond buyers are being realistic about Europe’s road ahead, hoping “the muddle-through scenario is going to come to pass.” It’s been a while since we could say Europe was a bright spot in economic news. So, at least there’s that.

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