Goldilocks or Recession on the Way?

Recent economic data has prompted another debate: “Has the economy decelerated to a sustainably moderate rate of expansion or is it heading for decline?” Clearly, our U.S. economy has slowed. New job creation is light, housing activity is stagnant, and pockets of stress are showing up. As examples, credit balances are at all-time highs, and car loan delinquencies are on the rise.

However, upper-income households are continuing to spend, averaging out the stress that lower-income ones are showing. Lower interest rates are around the corner, deregulation for some key industries is beginning to show benefits, and artificial intelligence has the promise of increasing business efficiency.

With a cross-current of data points, many are having a difficult time forecasting economic trends. The Bull and his partners fall on the side of an economy adjusting to new realities and progressing at a moderate but sustainable pace – Goldilocks; not too hot and not too cold. The most important indicator, the strong stock market, tells us that this is most likely. After all, the market is the collective judgment of millions of investors with skin in the game. Stay steady my friends.

-The Lonely Bull