I found another "bear" - they are starting to come out of hiding and showing their hand. Mr. Makin is even calling for stagflation - does that count as being the equivalent of 2 "bears".:)
cbs.marketwatch.com
<<Creeping stagflation: A new threat?
Stocks struggle in face of less growth and more inflation
By Gregory Robb, CBS Marketwatch.com
Last Update: 12:02 AM ET Aug. 8, 2004
WASHINGTON (CBS.MW) -- Stock market investors were hoping for a smooth trip through summer. Instead, they may end up taking a queasy ride, thanks to the emerging winds of inflation and stagnation.
"A whiff of stagflation is in the air," and the negative impact on corporate earnings and stock prices "could be ugly," said John Makin, resident scholar at the American Enterprise Institute, a Washington think tank.
Some economists are outraged at Makin, saying he's exaggerating current conditions by using "stagflation," a term coined during the malaise of the 1970s to describe the combination of slower growth and higher inflation.
Nevertheless, many experts have acknowledged the U.S. economy is downshifting and inflation pressures are rising.
"The economy had the big powerful thrust to get going ... and then has to slow up before the gears get in play and you can cruise along," said Don Ratajczak, an economist in Atlanta.
"So you get this little stall," he said. "The markets don't know how to read it."
The lack of job growth in July -- nonfarm payroll up barely 32,000 jobs -- fits squarely with Makin's thesis.
"Waning demand growth, falling productivity growth, and China's great reservoir of raw labor make sustained U.S. employment growth unlikely as we move into the second half of 2004," Makin said.
And there's more bad news in store, according to Makin -- a 3 percent inflation rate.
All this makes the second half look like the evil twin of last year's second half.
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