Why does the bull keep raging through the economic briar patch? Over the short term, investors are betting that a slowing economy will keep inflation in check and persuade the Federal Reserve to let interest rates drift lower. In the long run, most economists believe, new investment, export growth and government spending will push overall growth for the rest of this year a little faster than the 1 percent pace of the last six months. As Murray Weidenbaum of Washington University says, “The recession shot rolled around the rim and out.”
A minority of pessimists disagree. “We’re already in a recession or will be bef ore the end of the year,“saysDavid Ranson of H.C. Wainwright, a Boston investment advisory service. Yet economists in both camps agree the market is already looking beyond the immediate indicators to next year. “The market reflects the future, not the present,” says John Paulus of Morgan Stanley. And in Paulus’s view, the market thinks “the decks have been cleared for low to moderate growth for the indefinite future.”
