Everyone laments about all the negative news these days, but you can’t really blame the media. They are only serving up what we humans like to hear. I must admit, when CBS’s Nora O‘Donald starts her feel-good segment at the end of all her Evening News, I get up and leave the room to start dinner. But I do draw the line at watching negative “shock jocks” because their opinions (not to be confused with news) are not good for anyone’s health.
The Good News
Our economy is cranking. Yes, we have inflation, but that is not stopping shopping. Consumers are consuming in record-breaking numbers. In addition, unemployment is at an all-time low and wages are at an all-time high.
Even our GDP, that’s Gross Domestic Product (what we make within our country’s borders), is up 2%. Despite what you hear on the news, we lead the WORLD in production, way above China or any other country. Russia, in case you’re wondering, ranks 11th. Not sure why that country keeps being called a superpower. I call them super-bullies-with-oil.
And on the global stage, our current leadership has used the war in Ukraine to unite the world, bring unity back to NATO, and boost America’s benevolent popularity.
No Time to Worry (Economics 101)
And then there is the stock market. Economists often say the stock market is not a reflection of the economy, but I didn’t understand why or why not, until now. Finally, I heard an economist say, very simply, how raising interest rates causes a drop in the stock market.
As we all know, to slow the above-mentioned super economy and housing market, the Feds have raised interest rates. When this happens, the big players (I mean really big investors that manage and balance the risk/rewards of institutional portfolios like pension funds, mutual funds, and insurance companies) move large amounts of money out of the stock market to buy interest bearing bonds that, because of the higher interest rate, now have a better and always safer return.
Finally, I understand! It is merely a shift in our country’s investing, not a loss. And the money shifted to many of those bonds will go to fund roads, libraries, and schools. Another boost to our economy.
As to what causes the looming possibility of recession I keep hearing about, I am still at a loss. When and if someone can explain that to me, or has a crystal ball, I will share what I hear.
In the meantime, the good news is “buy low, sell high.”
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