No doubt the stock market will still run into some more stomach-churning downdrafts, such as yesterday's rout following blunt suggestions by Al Gore's designated aides that he favored a legal challenge to the Florida balloting. Investors are still tempering their expectations for corporate earnings. Yet shareholders seem to be inching closer to a more reasonable stock market valuation for a moderate growth economy. A look at other data also suggests that the economy will retain its vigor going forward. Productivity growth and job creation are still heading in positive directions.
Inflation is contained.
Instead, the rise in oil prices is a brake on economic activity, rather like a tax hike. The prospects of paying workers higher wages is keeping pressure on management to improve efficiency. To be sure, the outlook for spending on high-tech gear has dimmed somewhat. Finally, the outcome of the election bodes well for the economy, at least in the short run. With no effective majority in Congress, the next President will be forced to craft bipartisan compromises to move legislation forward.