May 21, 2013 (DJIA 15,384.24, S&P500 1,668.15)
Some quick ramblings on the economy
I think the economy is in a stable growth mode. At some point, I expect the Fed will start raising short term rates from near zero. I also expect that the economy will still move along in a typical historical manner for an extended period. During that period, I would expect occasional recessionary periods.
I also expect moderate inflation at some point. Moderate inflation should have positive impacts on businesses and workers. Inflation is difficult for retirees. We have not had real inflation in over 30 years. Former retirees were a beneficiary of this lack of inflation, as well as an extended period of deflation.
I think the USA should strive to lengthen their debts to take advantage of low long term interest rates. I also think the government should earmark required future projects (not frivolous projects, but required infrastructure projects) and include full scale modernization of USA infrastructure. A massive required infrastructure build can be funded with long term low interest rate loans. This inexpensive funding may not be available in the future.
Manufacturing in the USA is currently 12% of GDP. I think manufacturing is starting to come back to the states. USA labor rates have been stagnant for a decade or so, traditional outsourcing nations had and have wage inflation, making USA more attractive. One should also include costs of manufacturing outsourcing, modern factories in the USA, which are not as employee centric.
When we design portfolios, the above has been a common thought process in our implementation and research of specific investments.
As always, we welcome the opportunity to discuss our outlook and investments with you.
Ronald R. Redfield cpa, pfs
Redfield, Blonsky & Co. LLC
15 North Union Avenue
Cranford, NJ 07016-1103
908 276 7226 phone
908 276 7274 fax
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