November 17, 2018

The Economy Is Great, Really, for Now

“Whatever one thinks of President Trump, it’s hard to deny that much of America is feeling great again.

Surveys show that consumers have been this confident only twice before, at the height of the economic booms of the 1960s and 1990s, and their mood is bright across income groups, not just among the rich. Small business confidence has not been higher since the surveys began nearly five decades ago. The misery index, invented in the 1970s to describe the agonizing combination of inflation and unemployment, is now just 6 percent, matching the lowest levels of the last half century.

This year in particular, the economy has performed exceptionally well. Among major economies, only the United States has accelerated significantly in 2018, while Europe, Japan and many emerging economies have slowed markedly. The Commerce Department reported Friday that the economy grew at a very strong pace of 3.5 percent in the third quarter, putting it on track for its best year in more than a decade. This raises a question: Why has the stock market, which normally rises when investors anticipate strong economic growth, been gyrating wildly?

Investors may now be expecting America to peak after a hot decade. Even with recent setbacks, the performance gap between the United States stock market and the rest of the global markets is close to a 100-year high. Money flowing into the United States has also driven up the value of the dollar, which has never been more dominant as the world’s preferred currency.”

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