“It’s the economy stupid.” “The economy is doing great, except for the people in it.” “Are you better off today than you were four years ago?“ “We need an economy that works on Main Street, not just Wall Street.” "We are all Keynesians now."
In an election year, the cycles of the stock market will be meta-analyzed, and highly politicized, even more so than usual. The out of power party will paint a bleaker picture than reality suggests, while the incumbent party will propagandize the state of the union as stronger than it actually is. It's up to you the voter to vote in your own socioeconomic self interest, and for those that do, the economy and health care the major two issues.
For those who head to the ballot box with this in head, they are the polar opposite of wedge issue voters, or low information voters or single issue voters.
We talked health care (i.e. health insurance) in the last post, so now it's time to talk economic indicators. 2020 is shaping up to be an interesting year for the global economy and markets. Whether you want to invest in real estate, buy stocks, or trade currencies with brokers accepting US clients, you need to be abreast of what the key economic indicators are conveying, and where the two major parties stand on their various economic platforms.
The Trump tax cuts were a big giveaway to the super rich, and most of the one percenters are heavy Republican donors, so you can expect the current administration not to do anything that could upset their apple cart.
The Federal Reserve is more likely to raise interest rates rather than cut them, but you can expect a Fed neutral stance to be in place for the time being. If the economy starts to slow dramatically, it could change. Goldman Sachs economists don't believe the Fed will raise rates again until after the election however.
The idea of a rate cut doesn't seem to be on the horizon for a long time. Two economic indicators devoid of informational value these days are the unemployment and inflation rates. With the latter, the government has incentives to keep the Consumer Price Index as low as possible, and that's exactly what they do.
With the former, it's been a worthless number incessantly repeated by the media, unchecked, for decades already. If your jobless benefits run out (as they do after 18 months) you are not counted. Likewise if you are unemployed but never applied for benefits, or if you are out of a job but never qualified to receive benefits.
Sure, there are plenty of jobs out there, but they pay way too low to meet the basic standard of living, and it's not hard to find a neighbor or friend who has two or three of these kinds of jobs.
One economic indicator to pay attention to (as well as the rhetoric around it) is the Treasury yield curve. If it flattens, or even inverts again, a recession could likely be on the way. We covered that in more detail in our post previewing former Fed Chair Janet Yellen's speech in Chicago.
Paul M. Banks runs The Sports Bank.net, which is partnered with News Now. Banks, the author of “No, I Can’t Get You Free Tickets: Lessons Learned From a Life in the Sports Media Industry," regularly appears on WGN CLTV and co-hosts the "Let's Get Weird, Sports" podcast on SB Nation.
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Filed under: Current Events