The United States is now emerging from recession after nearly two years of contracting. This was not a recession that showed up in the economic data, however. Instead, it was a recession by stealth. And the fact that the U.S. is currently in the process of accelerating out of this recession is supportive of the U.S. stock market, at least in the short-term. Interestingly, it also raises a potential warning flag for the long-term as well.
What Recession?
What recession indeed. The U.S. did not just experience an economic recession in the traditional sense of the word, which is two consecutive quarters of decline in U.S. gross domestic product ((GDP)). In fact, U.S. GDP growth has remained steady, albeit lackluster, over the past several years.
Instead, the U.S. is now emerging from a profits recession. Since peaking in the fourth quarter of 2014, corporate earnings as measured by Corporate Profits…
