Economics will fuel anti-incumbency!
Fed Chairman Bernanke warned this week of a slowing economy. Fed Governor Poole warns inflation will continue through the slowing of the economy. This is raising great concerns on Wall Street as it hasn't been since the 1970's that Americans have had to be concerned a term coined back then called "Stagflation". Stagflation was a horrible period for Americans in which the economy remained stagnant failing to produce significant job growth, and failing to increase wages for Americans during a time when prices for daily living staples like food, gasoline and housing costs continued to rise eating up ever more of worker's paychecks. In other words, workers were getting poorer every year.
Many analysts on Wall Street are advising clients to get out of the stock markets until some clear sign on the future of staglfation is indicated. The reason is because the fear of stagflation is going to harm investors in highly volatile stock prices and very possibly a huge correction as much as 20%. Now is not the time for 401K investors to be in stocks, especially small caps, diversifieds, and growth stocks. Value and large cap stocks may fare better but in a market correction, all boats drop.
