This economic recovery is now about
five years old. So, time to reflect. Well, inflation is low, less than
2%. Treasury rates are low...10 year at 2.75%. Stock market around
all-time high, Dow abt 16,500. Home prices have recovered, but except
for prime locations, are reasonable and not back to all-time highs.
Unemployment is down but far from full employment. Plus, when looking
globally, the US has perhaps the best economy of the major nations.
So,
with inflation low and likely to remain tame since there is an
oversupply of labor....so no inflation pressure on the wage front, other
than for the small amount of highly skilled jobs.
But, there
are some good signs for the un- or under-employed. One, ACA makes for a
healthier workforce and more healthcare jobs, plus allows companies to
focus more on performance than a worker's healthcare costs.
Plus,
sooner or later immigration and tax reform will happen, which will help
the economy. And, no new wars on the horizon and ending the Afghanistan
one is scheduled for this year. So, more money for the government to
improve education and spend to re-train many for higher skilled jobs.
Sure,
some unexpected event or events can change things severely, but there
is no reason for now not to be optimistic for the future economy. Also,
generally the two years leading up to a presidential election the stock market does well.
About
stocks, there is some risk with the stocks that have little earnings,
which are many, so some correction is overdue and likely healthy. But,
many stocks have good fundamentals and unless 10 year Treasury rates go
over 4% or a sharp spike in short term rates, things look OK for now, though no one can predict the future with stocks.
Politically,
a split government is usually good for stocks, so we will have to see
what happens with the 2016 elections, to evaluate the political
environment meaningfully.
In sum, for now, the economy looks fine.
