|Dow||-2.96 to 17,814.94|
|S&P 500||-2.38 to 2,067.03|
|Nasdaq||+3.36 to 4,758.25|
|10-YR Yield||-0.05 to 2.26%|
|Gold||+$3.50 to $1,199.10|
|Crude Oil||-$1.95 to $74.22|
Well, that settles it. The U.S. of A. is kicking everyone else’s tail!
Revisions to the third-quarter GDP report show the U.S. economy grew at a 3.9 percent rate. That was up from a previous estimate of 3.5 percent, and far above the 3.3 percent that economists were expecting. Add in the healthy 4.6 percent increase in the second quarter, and you get the strongest six-month gain for the U.S. in 11 years.
An upward revision to consumer spending data helped. So did an increase to the estimate for business investment, and a downward adjustment in the rate of inventory growth.
|The U.S. economy keeps beating expectations.|
That doesn’t mean our economy is firing on all cylinders, or that everything is hunky dory. Wage growth has been much weaker this time around than in past recoveries, with average hourly earnings up a paltry 2 percent in October.
The housing market hasn’t seen its customary, vigorous post-recession rally, either — with the U.S. homeownership rate just sinking to the lowest level in two decades. Inflation has steadily eroded the real wealth of average Americans, and consumer and business spending aren’t as robust as I’d like to see.
But on a relative basis, we look like a shining star in a darkened, global sky!
Japan? Like I told you the other day, its economy actually SHRANK at a 1.6 percent rate in the third quarter. That means Japan is now officially mired in its fifth recession in the last decade, despite shoveling more than a quadrillion yen down the QE and stimulus rat holes.
Europe? Fuggedaboutit! A handful of countries are already in recession there, while others are on the verge of slipping into one.
The Organization for Economic Cooperation and Development (OECD) just warned today that the “euro area is grinding to a standstill and poses a major risk to world growth.” For good measure, the multinational forecasting organization added: “The euro-zone’s fundamental institutional deficiencies are now exacting a damaging price.”
|“If you’re a global investor looking for growth, you’re not going to get it in many parts of the world.”|
China is so desperate to save its economy that it just cut interest rates for the first time since 2012, while many economies in South America aren’t looking robust anymore, either.
Bottom line: If you’re a global investor looking for growth, you’re not going to get it in many parts of the world. So what are you going to do? You’re going to send your money here, where it will be treated better!
Again, it doesn’t mean we don’t have our challenges. Just that we’re the least ugly alternative in a world awash in cheap, easy money. Don’t forget that.
So how do you think we stack up? Are we the best house in a bad neighborhood? Or is the U.S. doomed to face the same stagnation or shrinkage as Japan and Europe? Are you investing more or less here in the U.S. vis-à-vis overseas, and if so, why? The Money and Markets website is your best place to comment, so let ‘er rip!
|Our Readers Speak|
The topic of Obamacare still has the comment board fired up, with posts on both sides of the debate coming in overnight.
Reader Kirk said: “Regarding insurance premiums rising and not really using health care in last two years, most of us have not called the police department, fire department and many, like me, have not had a child in public school for 15 years, yet property taxes keep going up. All of us need to pay a premium if we are going to have a system that works. However, the ACA needs to be altered to limit what is paid to providers (currently not addressed and no rationale for the increases).”
But Reader Doug said: “My insurance was cancelled due to it not ‘conforming.’ The new policy is 290 percent more expensive. This is for a single person. This new policy is sucking the life out of the economy. All the savings in gas now goes to insurance. I’m sure I’m not alone in the sticker shock.”
I wholeheartedly agree that the rise in health care premiums that I’m seeing, that you’re seeing, and that many other people are seeing is an extra tax on economic growth and disposable income. Reasonable people can disagree about the causes, but nobody can argue that it isn’t happening. Anecdotal and hard data prove it!
As for the “windfall” from falling energy prices, Reader Steve worries it will be squandered by politicians. His take: “Lower oil and gas prices would be a great thing if society and government were smart enough to use this grace period as the transition to renewable energy. Unfortunately, in the words of a former energy secretary, we hit the panic button when energy prices are high, and we hit the snooze button when they are low. Not very forward thinking.”
Any other thoughts out there on cheaper gas prices? Obamacare? The economy and investing strategy? Here’s the link to the comment section so you can add yours to the mix!
|Other Developments of the Day|
Rioting and protests erupted around the country after news late yesterday that a white police officer in Ferguson, Missouri, would not be indicted for shooting and killing a black teenager. Versions of what happened that day differ, and it’s possible we’ll never know the full truth. But this New York Times story does its best to sort things out, based on grand jury testimony.
House-price appreciation continues to slow, just as I’ve been predicting for some time. The S&P/Case-Shiller price index showed a 4.9 percent year-over-year price rise in 20 top metropolitan areas in September. That was the smallest gain in almost two years.
If you’re the kind of person who likes to count calories to keep your weight in check, you’ll find it easier to do so soon. The Food and Drug Administration will require chain restaurants, vending machine operators and others to supply calorie counts for their meals and snacks. Still, the rules give food providers a grace period of one to two years to comply, and there are exemptions for certain items.
Just how much does it cost to host a Thanksgiving dinner? One report from the American Farm Bureau Federation says about $49.41 for a 10-person dinner, up 37 cents from a year ago. This Yahoo story has some more tips on how to save money, and on whether those figures are in the ballpark.
Until next time,