Tag Archives: Mohamed El-Erian

Unemployment: Part of the Economic Cycle or Secular Shift?

Bob Huebscher just published an outstanding article on the sustained high level of unemployment in the United States.  The question that he seeks to address is whether we are in the recovery phase of a major recession or we are actually in the midst of a long-term shift in the economy.  The article calls these two possible explanations ‘cyclical’ and ‘structural.’  It is worth understanding the key factors that have resulted in the current persistent unemployment levels in order to put the recent modest reduction in unemployment into context.  Are we seeing signs of the long-awaited recovery that will bring us back to full employment or is the recent growth in employment simply variability around a long-term shift in the U.S. economy in which unemployment will remain well-above historical levels? Continue reading

Investing in Dividend Stocks Now

With events in the Middle East and Africa boosting oil prices, some economic watchers are beginning to talk about the possibility of stagflation: a period in which both inflation and unemployment are high. Like the 1970s in the U.S., the time of “malaise,” lines at the gas pump, and strong performance of dividend stocks.  According to John Schloegel,  portfolio manager at CORDA Investment Management, during the stagflation of the 1970s, 70% of the total stock market return for the decade came from dividends, only 30% from price appreciation. Even without that bad brew, dividends pack a punch, he says: Over the longer run 40-45% of total stock returns can be attributed to dividends. Continue reading