Things have been looking up for the U.S. economy
The markets have been setting records
“I have good news and I have bad news,” goes the saying, “which do you want first?” Well, that’s mostly where I feel we're sitting with the world, the economy and the markets.
NINETY PERCENT GOOD NEWS BUT FIRST…
The U.S. economy is solid, not spectacular, but workable. We’re hitting various new records and, compared with markets like Europe, we’re strong. Although, we do have some weak spots.
RECORD-LOW RATES FOR A RECORD LENGTH OF TIME
The glaring proof of this weakness is interest rates. Never have Fed rates been this low for this long. For about 91 months rates have been near-zero. We just barely edged them up once.
RECORD: 91 months of near-zero rates
A lot of folks prefer the labor participation rate to the unemployment number. This shows how many people are employed or looking for work. While we’ve been lower than today, in the 1970s, we’re not at our worst. The move back up has just been a slow slog.
RECORD: 39 year-low labor participation rate
ALL MAJOR U.S. MARKETS AT OR NEAR RECORDS
The Dow Jones closed at 18,559 on July 18. The S&P 500 closed at 2,137 a few days before, hitting yet another record. Really, the S&P has been on a three-year bull-run, gaining in all years from 2013 to today.
Last year the Nasdaq broke through it’s old Dot-com record, set in 2000. That was significant since we went past a very artificial price and achieved a sustainable level based on a solid economy, rather than speculation.
RECORDS: Dow Jones past 18,500, S&P past 2,100 and Nasdaq past 5,000
HOUSEHOLD WEALTH AT ALL-TIME HIGH
Households may actually be feeling richer, too. Total net worth is up $32 trillion dollars from the depths of 2008! The last quarter of last year produced a gain of over $2 trillion. That’s big money.
The latest quarter, according to the Federal Reserve, had real estate jumping by almost half a trillion dollars. Most folks own a home and will feel those positive vibes. We also have low gas prices and this could all spur an even better economy. Speaking of which…
RECORD: Household wealth at $88.1 trillion
ECONOMY AT ALL-TIME HIGH
Last, and most importantly, U.S. GDP is at a record high. Again. We’ve been hitting new highs for years now. We’re also estimated to keep hitting new highs into the future.
RECORD: New high each year for over seven years.
Well, I went for the bad news first. Which wasn’t too bad: interest rates are low which helps consumers and businesses. Unemployment is largely better, cut in half from the recent recession. And the good news is very good news.