Is the economy rolling over?
Photo: Alexandra. Source: Pixabay
Every so often our dog just rolls in the yard. We’re not sure why, whether she wants to scratch an itch or stretch or just frolic. It doesn’t matter whether it’s snowy or icy or hot or pleasant. When the time comes, she just rolls over and over.
That’s how some people view the economy. Conditions could be good or bad or indifferent, but when it’s been long enough they figure it’s time for the economy to roll over. They figure too much of a good thing – economic growth – is too much. So they expect a downturn, as payback for all the good times.
When you look at the data, however, it doesn’t seem likely that the US is headed into a recession. Employment is growing, incomes are growing, consumers are spending, and factories are humming along. Each of these is growing about 2% per year. And when all four are stable, the economy tends to do pretty well. That’s the case right now.
Source: St. Louis Fed
Please note what we’re not saying. We’re not saying anything about stocks or bonds or gold prices or Elon Musk or valuations or sentiment or trade deals or monetary policy or the global economy. If you’re looking at this post to get personal investment advice, you’ve come to the wrong web site. To be useful, investment advice needs to consider each investor’s unique needs and circumstances, and we can’t do that here. Investment advice is a lot like legal advice. What matters is what matters for you.
But we are saying that the US economy looks pretty good, at present. Economies don’t get a seven-year itch, and expansions don’t die of old age. So long as our policy-makers don’t do something dumb, there’s no need for the US economy to roll over or play dead. Let’s hope we can all keep frolicking.
Photo: Dirk Vorderstrasse. Source: Wikimedia
Douglas R. Tengdin, CFA
Charter Trust Company
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