Thursday, February 1, 2024

Prosperity Ahead!

"When E.F. Hutton talks, people listen."

If you're old you might remember this advertising slogan. I use it today to introduce some economic information. It's all good news, for you and everyone else.

Over the last decade I dove into economic research and used my analysis to earn several million dollars. I'm sharing my thoughts with you because you're my friends. I don't sell anything, have nothing to tout and merely want you to enjoy the same prosperity. Economics was my major in college and comes easy to me; it's simple math threaded with sociological insight.

Two things to mention today. First, the quarterly announcement by the Fed this week was exactly what everyone (and the stock market) expected. Jerome Powell, head of the Fed and the opposite of a Pollyanna, bluntly declared the U.S. economy to be in tremendous shape, especially compared to the rest of the world. Our economy is hitting all major benchmarks and remarkably achieving a "soft landing": i.e., avoiding a recession after last year's rapid interest rate hikes. Few predicted that outcome last year. In fact, nobody predicted it. The soft landing unicorn ensures a robust economy during this election year. (Election years always boost economic forces.) If you're not feeling financially better off, there are many complex reasons for that misalignment; they won't be tackled here.

A second fact which ought to be understood more widely but isn't due to outdated belief is what's happening in China. The Chinese economy is declining in a serious way -- long-term systemic decline. Everyone thought and feared China becoming our greatest global challenger but that's not going to happen. Not only is their economy bad but their autocratic government refuses to implement critically needed reforms to address the problem. China, suffering persistent deflation, is destined to the fate that befell Japan a generation ago: 25 years of stagnation and economic doldrums. 

A few smart economists are pointing this out and their case is convincing. Most Chinese residents have most of their money (70%) tied up in their homes which are decreasing in value every day. That makes them feel poorer and act accordingly. The Communist Party is politically averse to stimulating the economy which is the only path out of that mess. We should be aware of this because it'll certainly ripple to us and the rest of the world. It'll open up opportunities for American companies to prosper at China's expense in ways previously thought unimaginable.

In short, the news is good! Caveats always exist from potential unexpected events but we have solid reason to expect a very favorable few years coming up. Enjoy!


  1. Interesting about China. What
    does this mean for us in the UK where things seem to be getting harder? Our mortgage rate comes to an end in December and am dreading it as our interest payments will more than triple at least! Kxx

    1. The twin developments in America and China will affect England but even more important to you are consequences from Brexit. Cutting England off from continental Europe was highly significant to your economy. I'm not going to judge the choice but it's having numerous economic effects. For example my friend in rural Wales says farms and slaughterhouses there lost the Eastern European immigrants who were willing to do dangerous, dirty work for little pay and locals won't fill their spaces. Importing/exporting has changed and the cost of most business operations have increased. For whatever good may have come from leaving Europe financially, your country is suffering massive negatives. That'll affect most ordinary people in multiple ways. So... not good news. Sorry, friend.