So much conflicting news lately. Europe appears to be heading further down into the hole with slower growth, renewed chaos in Italy and Spain, and potentially another round of single currency crises. China’s growth appears to be slowing again, and there are concerns about graft and corruption within the Communist Party. Chinese growth targets have been dialed down in the provinces. The sequester, if it continues on into the year will resemble, in the words of a report on NPR “an avalanche growing in destructive power”. Indeed, the world economy appears to be having some issues, and it seems hard to believe the US economy, the market, and unemployment could buck the trend.
Or could it? American business and consumers, so intimately tied together, both seem more optimistic. American manufacturing expanded more rapidly than anticipated, housing construction is up, and consumers seem buoyed by the better employment, higher stock prices, and rising home values. As has happened again and again, might the American consumer and the American business community pull themselves up by their own bootstraps and then give the world a hand once they are on their feet?
In the near term the picture never looks clear. There are always reasons for doubt. Eventually, the fundamentals will emerge. China is destined to be the world’s largest economy by raw GDP numbers, but is also destined to have its growth slow and to have increasing difficulties bringing along its middle class and dealing with the issues of all rich countries. The Chinese Communist Party will have serious issues at some point and no one knows what will replace it. But is still going to be a large and important country taking its rightful place in the world. Europe will eventually emerge from its current malaise and one of the world’s most prosperous regions will return to growth. The US will continue to grow, and begin to change the nature of world politics with a renaissance in its energy production, consumption, and importation patterns.
What does all of this mean for the average person? With prudence, decent saving, and defensive-minded investing there is no need to do much more than smile, whistle a tune, and if it starts to rain put up an umbrella until it passes. Make thoughtful decisions but always see the future as a time of opportunity and act accordingly.
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