The GDP came in at 3.0%, lower than expected. But Q1 GDP was revised up to 4.5% from 3.9% so perhaps Q2 will be revised up as well. And other releases today, July consumer sentiment and Chicago manufacturing for July, were higher than epected.
I read the Reuters writeup on the GDP at Yahoo. I find it interesting that wheneve an economic number comes in below expectations Reuters throws in a "this won't Bush in his reelection bid" sentence/paragraph.

I remember a Psychology Today article many-many years ago that analyzed the stock market from the POV of Mob Psychology and got some pretty good matches between theory and reality...

I don't think they meant the stock markets. They're closer to horse races. All markets have a psychological bases and it's one of the reasons they are useful as indicaters and for establishing relative values between commodities, goods and services.
The invisible hand never rests and may be ignored only at ones peril.

Fundamentals are awful. What looks good is the current pulse of the economy. A pulse is not a fundamental. Someone can have a strong pulse, but if his tryglicerides are sky high, he's headed for a heart attack sooner or later.

The budget deficit is at a record high. Personal debt is at a record high. The trade deficit is at a record high. And all three are headed higher. An economy that can only manage 3.8 growth with this level of stimulus has problems.

This talk of liquidity is nonsense. Companies are sitting on mountains of cash because there aren't any good ways to invest it right now. Should they build more capacity? More car factories? Semiconductor plants? There is no pent up demand. Growth has peaked. This guy isn't looking at the macro picture, he's looking two feet in front of his toes. The "fundamentals" looked even better in 1999, and none of the bulls had a clue what was to happen a year later. They still don't.

Robert:

The federal debt was 150% of GDP in 1945. This began the complete and uninterrupted dominance of the globe by the United States. It's 70% now.

Meanwhile, household net worth is 400% of GDP. Has any country ever even approached that?

"The trade deficit is at a record high."

Until somebody cam explain why this is bad, I'll continue to think that people who say it are just invoking the boogeyman.

They give up cars and TVs and VCRs and clothes and shoes all other sorts of stuff. In return, we give them pieces of paper with pictures of dead white guys on them.

Who is getting the best end of the bargain?

Mr. Judd;

I'd be interested in you finding a quote that states that the market is a "perfect information system". The accuracy of the stock market in measuring the economy is inversely related to the length of time you are measuring. Over days, it's basically random. Over decades, however, it's very accurate.

AOG:

http://www.fact-index.com/p/pe/perfect_information.html

The trade deficit should be at a record high. The US economy accounts for 30% of the entire (official) global economy. There aren't any countries that can catch what America can throw, thus, deficit.

The Federal Budget deficit is at a nominal record high, which is to say, it impresses the rubes.
Otherwise, it's at 3.5% of GDP, which is eminently manageable.

In any case, debt must be evaluated with consideration for what it's been incurred for. By that standard, the Federal Debt growth over Bush's first term is fairly defensible.
The growth in personal debt might be partially explained by the record number of homeowners that now exist in America, which is a net positive.

Michael:

Once you subtract personal debt from home equity and the like it disappears.

OJ
In 1945 the rest of the industrialized world was in shambles. We were the world's production line. We produced and the rest of the world bought from us. We were the world's #1 oil producer and exporter. The reverse is true now.

Yes, we were essentially a colonial economy--getting by on exploitation of natural resources and doing menial labor for wealthier nations--now we're the imperial economy and the rest of the world works for us.

"Until somebody cam explain why this is bad, I'll continue to think that people who say it are just invoking the boogeyman."

Ray, read this:

http://www.iie.com/publications/chapters_preview/360/7iie3519.pdf

To summarize, we are beggaring our productive economy. Money spent on foreign goods does not contribute to production growth here. Manufacturing capacity and employment in the US has declined. We are losing muscle mass and replacing it with flab.

OJ,
Wealthier nations??? Like Germany, Japan, France, England and Italy?

You sound like a Roman aristocrat calling for another peeled grape from your servant - meanwhile he's opening the door for the Vandal horde.

We're the horde.

Robert:

That's just foolish. You can't pay the citizens of a developed nation as little as manufacturing labor is worth.

Did you read the article OJ? Service labor is paid less. There is no reason that we need to lose manufacturing jobs to Asia, except for the irrationally high value of the dollar. The only reason that a guy from Bombay won't take away the job of the guy who cuts your lawn is because you can't ship your lawn to Bombay. The guys losing their manufacturing jobs to Asians aren't becoming doctors.

No. Asia is just a stopping off point. Others elsewhere will be doing the same work for less soon and Asia will be losing manufacturing jobs. The guy's son is a doctor.

India is already losing American-outsourced IT jobs to lower-priced countries.

As was mentioned on this blog, Africa will be the 21st century Asia.

Africa will be the 21st century Africa.

Good one, Harry.

Africa and Asia will probably just become more stratified than they are now. While there is a new 'upwardly-mobile' class in China, there are still probably 850 million laborers. Will their lot improve as the financial system struggles to find some sense of balance? India has made gains, to be sure, but the caste/religious issues and the palpable sense of disinterest (to be polite) lead to the worst kinds of evil. And Africa is much worse. Economic 'development' will help, but the West needs to send a sheriff along with the money, and give him orders about killing anyone who filches the loot.