The Uncertain Future of Your Personal EconomyJames Cordelaine
Maybe it’s old-fashioned American optimism, or maybe it’s the increasingly thin air we breathe as we get closer to the election. But we read a great deal these days about how well the U.S. economy is doing. It’s true we’re seeing some things that are usually signs of progress. We’ve seen some new hiring, albeit in the lower-paid service sector. Home builders are back at work as the number of Americans hoping to buy is increasing. Inventories are down and no longer pulling on the economy.
But the net economic effect is less robust than it appears. With an annual compound rate of barely over two percent since our present recovery purportedly began back in 2009, our economy has endured its most sluggish economic rebound since World War II.
Despite the somewhat improved news in the first quarter, our economy is weaker than it’s been in the last two years. Businesses have curtailed investments as profits have declined. Moreover, according to government records earnings actually dropped by 3.2% percent in 2015. This is the first decline since the Great Recession. According to Scott Anderson, chief economist of Bank of the West, “In many ways the labor market recovery remains subdued, with some visible chinks in the armor beginning to show.”
Harvard Economics Professor and former U.S. Treasury Secretary Lawrence Summers lays a good deal of the problem squarely at the feet of the central banks of the world. Interest rates are excessively low, and too much money is being directed to savings and not enough federal spending to public infrastructure programs.
But not every economist agrees. William Dudley, president of the Federal Reserve Bank of New York, feels we’ll be back on track later this spring. But Robert King, a senior economist with Jerome Levy Forecasting Center, attempts to end run both points of view when he declares 2016 will be an “exceptionally confusing one for pattern-matching economists.” Still, King doesn’t mind imposing his own pattern to explain what’s ailing the economy when he claims, “U.S. consumers are not going to trigger the next downturn…nor will they be immune to its effects. The falloff in U.S. exports is more telling of the U.S. outlook for 2016 than trends in housing, employment or retail sales.”
This points out the disquieting possibility; some even say probability, that forces and factors outside our country have decisive influence on the health of our domestic economy. We are no longer masters of our financial fate.
What we can with certainty gather from all this is that there continue to be fundamental weaknesses in our economy. But there’s no agreement by self-proclaimed experts on how to fix them, a concern for everyone, but particularly for those of us entering (or exiting) our fifties and staring down the barrel of retirement.
Maybe the solution is to think small for once, rather than globally. We have the option to stick to what we know when it comes to building our own financial resources, rather than relying on “experts” to hopefully pick the “right” investments for an uncertain future. You don’t get extra points for making it difficult for yourself, and you likely reap fewer rewards.
We know physical gold serves as a hard asset negatively correlated to our vulnerable dollar and unpredictable stock market. We know its value has been continually tested and re-established for centuries. If you know you’re going to need to be able to spend that value sooner rather than later, no one can stop you from seizing that protection for yourself and your family – no matter what financial elites both inside and outside our country expect you to do.