Positives investors can take away from the current investment climate. In what has been a good year for most investors in the stock market, with the year set to close out near all-time highs, there are a number of reasons why 2017 has been one of the best years to date for investors.
Currently, the global economy is in a solid state, there is low unemployment throughout America and there are now record middle-class real incomes.
While there was a bit of panic that set in throughout 2015 and 2016 with regards to the Chinese economy appearing to go into somewhat of a panic and saw American exports to Asia slow down dramatically, taking share prices and growth in the U.S down alongside it, it appears as if the opposite effect is currently occurring.
The forecast for global growth do now constantly improving and many experts believe that with emerging market prices still being relatively cheap due to their scope for growth in the future. This is good news for those countries who are trading partners with these emerging economies. This doesn’t matter whether or not the President of a country sees trade as a zero-sum game.
The levels of unemployment have now reached 17-year lows and the real incomes of the middle-class have now hit record levels. In October, the unemployment rate was just 4.1%, which is exactly the same as it was back in the heady days of 1999 when it hit peak levels. Having been adjusted for inflation, the median household income in the U.S has bypassed the heights it reached during the dot-com bubble.
The best part about all of this is that it is occurring in an economy that is experiencing low levels of inflation with no major bubbles to be concerned with. There is a lot of capability left when it comes to manufacturing and in general, houses are affordable in the majority of areas. Prices of housing have increased by 4%, with income closely following it with rises of 3%.
This showcases how the steady increase can continue for some time while maintaining low levels of unemployment and wages rising before some sort of bubble or rot occurs.
There is also scope for positivity if President Trump goes ahead with his promise to cut corporation tax levels which will aid businesses and investment, as well as if the improvements in productivity across businesses continue to improve.
With interest rates remaining at extremely low levels, this means that consumers now have a higher level of purchasing power, with the % of income that people commit to debt service on a monthly basis being at 35-year lows. Credit cards, car loans and the likes are cheap which encourages consumer spending and investment into the economy.
Oil prices remain cheap, albeit not being as cheap as it was in recent times, which will see households save significant amounts over the course of a year compared with the period when it reached $100 per barrel.
The price levels have also reached a level that allows the energy companies to be sustainable as prices are no longer at a rock bottom.
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