by Mark Schniepp
A year ago I made the assessment that the economy was boring, growing at a lackluster pace but growing steadily nonetheless and generating higher asset values, more jobs, more spending and rising confidence by consumers in the U.S. economy.
Just recently, Moody’s economist Mark Zandi picked up on this idea and wrote about it in his monthly U.S. Macroeconomic Outlook at economy.com, noting:
It’s almost boring. Regardless of what’s happening around the globe—and a lot seems to be happening—the U.S. economy continues to plug away. The U.S. economic expansion is 8 years old and counting, and growth remains remarkably stable.
The stability of the economy and the lack of any drama has made monitoring the economy a boring task. The boring economy is why the stock market continues to set new records, seemingly every month. Stock markets hate surprises typically created by chaotic events in the U.S. or World economies. They like steady growth, little inflation, low unemployment and modest wage pressures, exactly what we have now.
Yes, the economy is both stable and boring. There is no drama. No inflation, no runaway interest rates or even rising interest rates, no scarcity of job openings or new hirings, no consumer meltdowns, no financial crises, no bubbles (that we can detect), and gasoline prices that have remained relatively constant for the last 2 years………
There is a disruption in the retail sector, which was the subject of the July newsletter. But nevertheless, despite retailer closings all over the country, there is no diminishment of economic growth and no threat of recession. The index of leading indicators continues to rise month after month. The risk of recession fell to its lowest level ever in April and it remains low today.
GDP growth came in at 2.6 percent for the 2nd quarter of 2017. That’s neither too hot nor too cold. The unemployment rate is now at 4.4 percent, indicative of an economy in which everyone who wants a job can get one. Inflation is running at less than 2.0 percent again, even the core rate.
Internationally, European growth has improved and even the Chinese economy has rebounded. Furthermore, we haven’t heard about Greece in some time.
There’s just not much to get worried about or for me to warn you about. It’s just plain boring out there. So continue to enjoy your full time job, your rising salary, your summer vacation, your new car, your new or remodeled home and your new IPHONE 8, due out this fall.
Our next conference is scheduled for September 7, 2017 in Westlake, California. We are presenting the 2017 Ventura and Los Angeles County Entrepreneurial Economic Outlook. The venue is the Hyatt Westlake. The time is 7:30 AM to 10:45 AM. Please click on this link for further information:
The California Economic Forecast is an economic consulting firm that produces commentary and analysis on the U.S. and California economies. The firm specializes in economic forecasts and economic impact studies, and is available to make timely, compelling, informative and entertaining economic presentations to large or small groups.