Lots to look forward to as New Year dawns
January 21, 2014,
Last year started out horribly, but gained momentum beginning in the summer. That momentum should carry into 2014 in a positive sense just as the late year weakness in 2012 carried into 2013.
At least early in 2014 we are not facing several higher taxes including the reinstatement of the higher withholding tax like we were last year. Yes, the cost of the Affordable Care Act is an unknown, but is not an across the-board tax increase like the withholding taxes.
We learned some lessons in 2013. Our economy can absorb the sequester, just in time for round two. We can survive a government shutdown, too. Political brinksmanship over the budget and debt ceiling makes headlines but over and over again, these "world-will-come to-an-end" crises pass and something akin to normal continues.
Every economist opens by saying these are "uncertain times," but can you ever remember "certain times?"
Want to worry about 2014-2015? I can point to lots of concerns that will keep you awake, but we also need to recognize our worries today pale to how we all felt after the tragic events of September 11, 2011 (where were you?) or in the economic freefall in the last months of 2008.
Both of these were totally new, un trodden territory and we all faced the same massive anxiety. We all survived to a large degree although we all never look at things the same ever again.
Thanks to higher taxes from a more vigorous economy plus the wars ending, the federal deficit is declining. Corporate profits are up, the stock market is roaring, and the American consumer is wealthier thanks to stocks, home prices and less debt.
The auto and housing sectors are recovering nicely and the unemployment rate is 7%, not the 10.4% of 2009 or the 26% rate of 1933.
Mortgage rates are rising but today's 4.35% is a lot better than the 8% to 12% mortgages I remember having. Imagine how much spending they kept out of the marketplace back then?
Inflation is less than 2%. Remember double-digit inflation and how it lowered everyone's incomes?
We have another fresh start coming in Las Vegas soon. It should be worth attending to see the new mattress wars alone.
And increased housing mobility is reinvigorating the bedroom business, and the new, larger ultra-HDTVs will cause updates to the home theater and make the first generation televisions migrate into the bedrooms, and there is lots more.
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