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Sorry about the title but someone had another recent thread about preparing for the next major crash.
Clearly I think the economy is improving and that will change how we spend and how we invest our money. I am not going to bother with a poll on this issue because I already know there are plenty of people on this forum who are pessimistic and have been waiting since 2008 for the next shoe to fall.
To begin this thread I thought I would list a handful of reasons why I see a much stronger economy ahead of us.
It would take forever to discuss and analyze the major economic markers but it seems clear that unemployment has greatly decreased, many businesses are doing well and profits continue to increase and often exceed expectations.
Next the world economy is doing well or at least is stable. Greece continues to struggle but overall there do not seem to be any major European issues. The same with Japan. The Chinese economy is slowing down. They are still growing at a rapid rate but I see a slow down as a good thing. Partly I think we are seeing an increase in US manufacturing. Low energy costs are helping and will continue to help our light industries.
Low energy, oil, gas and natural gas prices are a big boost for all of us and for the economy as a whole.
Our Federal government is unable to do anything major to disrupt our economy. In fact with a Republican Congress and weak President we can expect only the status quo.
On a personal level I see all sorts of indications of a strong local economy. After 08, restaurants were closing. Now they are full with new ones opening. After 08 stores were empty and traffic was light. Now both are "bad" again.
I need some carpentry, electrical and plumbing work. I beg, plead and wait for weeks to get anyone who is available.
I live in a high tax area which means there is a big underground cash economy. After 08 that had slowed. Now I go to the stores and see plenty of people again paying for items with cash from big wads of $100s.
I have a 20 something daughter. She and her friends were graduating and struggling soon after the 08 crash. Now all seem to be doing well with good jobs and many opportunities.
I have spent more than 50% of the last 4 years traveling around the country in an RV. It was dismal at the start of my travels with lots of closed businesses and for sale signs. I do not see much of that any more. I do see a lot of new expensive RVs on the road.
I could go on for a long time, but I think I have thrown out plenty of ideas for discussion, if anyone is interested
1) Real Estate: Most buyers are still very qualified with large down payments or all cash purchases.
However, there are private investors that are starting to accept stated income again. There are more guidelines than pre-bubble, but the fact there are some private investors going back to this route worries me a bit. As of right now, most buyers are what I said above though.
2) Economy: Our economy is increasing slowly, but steadily, which to means it is less bubble-ish.
3) Interest Rates: There is still nowhere to put your money besides the stock market.
So, how do we prepare?
I will continue being fully invested in the market. When we get another correction, I will add money if we bounce off support or sell if we fall below support.
Real Estate was a great addition to my little list. My daughter just finished a struggle trying to buy a condo in Oakland. She lost out on a half dozen offers over the course of a year. Bids were bumping her out with 100% cash offers at above asking prices. In my area there are very few houses on the market. A few years ago there were signs on every block.
Sorry about the title but someone had another recent thread about preparing for the next major crash.
Clearly I think the economy is improving and that will change how we spend and how we invest our money. I am not going to bother with a poll on this issue because I already know there are plenty of people on this forum who are pessimistic and have been waiting since 2008 for the next shoe to fall.
To begin this thread I thought I would list a handful of reasons why I see a much stronger economy ahead of us.
It would take forever to discuss and analyze the major economic markers but it seems clear that unemployment has greatly decreased, many businesses are doing well and profits continue to increase and often exceed expectations.
Next the world economy is doing well or at least is stable. Greece continues to struggle but overall there do not seem to be any major European issues. The same with Japan. The Chinese economy is slowing down. They are still growing at a rapid rate but I see a slow down as a good thing. Partly I think we are seeing an increase in US manufacturing. Low energy costs are helping and will continue to help our light industries.
Low energy, oil, gas and natural gas prices are a big boost for all of us and for the economy as a whole.
Our Federal government is unable to do anything major to disrupt our economy. In fact with a Republican Congress and weak President we can expect only the status quo.
On a personal level I see all sorts of indications of a strong local economy. After 08, restaurants were closing. Now they are full with new ones opening. After 08 stores were empty and traffic was light. Now both are "bad" again.
I need some carpentry, electrical and plumbing work. I beg, plead and wait for weeks to get anyone who is available.
I live in a high tax area which means there is a big underground cash economy. After 08 that had slowed. Now I go to the stores and see plenty of people again paying for items with cash from big wads of $100s.
I have a 20 something daughter. She and her friends were graduating and struggling soon after the 08 crash. Now all seem to be doing well with good jobs and many opportunities.
I have spent more than 50% of the last 4 years traveling around the country in an RV. It was dismal at the start of my travels with lots of closed businesses and for sale signs. I do not see much of that any more. I do see a lot of new expensive RVs on the road.
I could go on for a long time, but I think I have thrown out plenty of ideas for discussion, if anyone is interested
I agree with lot of your points but I believe if the following situations get corrected then the economy as well as corporate profits is going to grow more:
1. Unemployment is low but underemployment/# of people in part-time jobs but seeking full time jobs is high.
2. Depressed wages.
I agree with lot of your points but I believe if the following situations get corrected then the economy as well as corporate profits is going to grow more:
1. Unemployment is low but underemployment/# of people in part-time jobs but seeking full time jobs is high.
2. Depressed wages.
Good points. Clearly unemployment and underemployment have greatly improved and there is way more potential for improvement. I would argue that wages are not "depressed" but wage increases have been minimal. Of course, inflation has also been very low. In any case as you stated as employment and underemployment improve, we can expect more consumer spending, an uptick in the housing industry and in retail, etc. Certainly a powerful force for continued economic growth.
U.S. National Debt Clock : Real Time
Nobody knows when all of this debt is going to explode or if it can be reduced.
I agree that near term the stock market will continue upwards. Money has to go somewhere. Stocks are benefiting from an improving economy, pathetic CD rates, "the bond bubble", QE.
Real Estate was a great addition to my little list. My daughter just finished a struggle trying to buy a condo in Oakland. She lost out on a half dozen offers over the course of a year. Bids were bumping her out with 100% cash offers at above asking prices. In my area there are very few houses on the market. A few years ago there were signs on every block.
I work in real estate and mortgage loans in the Bay Area, so we might be neighbors lol. The vast majority of transactions are cash offers or big down payments, but we are getting more and more account executives pushing their stated income loan programs. I think we won't see a housing bubble like in 08 for awhile, but just throwing it out there, that those pesky programs are starting to pop up now.
I live on Long Island. It is my younger daughter who has settled in the Bay area and has a condo in Oakland.
I do know first hand about mortgages on Long Island. Very difficult even with 20 or 30% down, lots of assets and a solid income stream. Sales and new construction are depressed due to the difficulty of getting mortgages. I do not understand how it works in the Bay area but here young people with good jobs just cannot seem to accumulate enough to buy a house here.
I agree with lot of your points but I believe if the following situations get corrected then the economy as well as corporate profits is going to grow more:
1. Unemployment is low but underemployment/# of people in part-time jobs but seeking full time jobs is high.
2. Depressed wages.
Depressed wages? Son is 26 and living in the Bay Area. Salary is in six figures. Does that sound depressed?
Also look at the September labor stats in detail. The unemployment rate for the super category of management, professional and related services is now 3.1%. Clearly very low. Farming, ranching and forestry is at 12.9%. Unemployment rates for jobs in transportation and maintenance are about 9%.
It is my belief that no matter how strong our economy, some jobs are just not going to return and with good reason. My grandfather was a farmer. He had a small Ford tractor and a hoe for weeding the fields. Those days are going, going, if not yet gone. Willy Nelson can put on concerts in support of the small farmer but that will not change the trend. Whenever possible low skilled, low tech jobs are being replaced by automation, computerization, better and more efficient processes on a larger scale. In manufacturing, if a robot cannot do it, the job is likely to be done overseas.
We are now shopping online. There are still plenty of clerks and cashiers sitting in small retail and service stores waiting for customers. Those jobs are at risk. The 18 inefficient, overpriced stores in Puke, Iowa are now out of business and have been replaced by a Walmart store with better quality, better selection, better prices ..... and fewer employees.
Unemployment due to the 08 crash is at this point largely a myth. Lots of jobs have gone away permanently.
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