Circumstances Matter

Are you better off today than you were four  years ago?  I suppose that it depends-upon your circumstances.

If you are retired and a member of the ownership class (real estate, stocks and bonds) you're likely doing better than OK.  Historically this isn't always the case, yet for now the current economic cycle favors these sectors. 

If you are a working couple with kids and a mortgage; perhaps not so much.  Higher interest rates and inflation might be making it harder to make ends meet.

Nevertheless, there is no getting around the fact that the US economy is much stronger than that of similar countries in the post-COVID world.  How come? 

A recent report from The Fed offers some insights.

Labor productivity in the US is greater than that of peer nations.  US industrial policy in response to military support for Ukraine plays a role.  Monetary policy has insulated the public from large swings in borrowing costs.  And while small business bankruptcies soared to historic levels in the last year of the Trump presidency; the recovery has been far more successful here than abroad.  In the US, strong fiscal policy, lower pass-through from monetary policy, and a more flexible labor market may have all contributed to supporting a new wave of firm creation over the past three years, the Fed economists write.

The outlook remains robust with inflation-adjusted GDP growth forecast at 2.4%  for 2024.  Inflation will persist but slowly recede. Rate cuts may be fewer and smaller.

Learn more about the outlook here.