SW KS, near Dodge City | Bert - 11/28/2015 20:45
I completely disagree with most of her comments.
A windfall for the US consumer? Where exactly is this windfall coming from when wage growth is stagnant?
The Fed will raise slowly to about 100 basis points in the next 12 months? I'd like to see how that affects consumer spending in the next 12 months.
China's slowing growth is the reason for sluggish markets? It is the other way around. Decreased demand from the West is slowing the Chinese economy.
And lower commodity prices will drive consumer spending? Maybe a little bit the whole reason they are falling is a strong US dollar coupled with weak demand.
I admire her optimism but I see a very weak economy which generally means consumers are not going to spend freely like she seems to think.
By the way, this could be good for commodities over next 12 months, especially if the Fed reacts by not raising rates, or even turning on the printing press again.
1. The windfall was the decline in gas prices. That's basic living expense money that is now disposable income.
2. Chinese growth over the last 7 years has been internally driven, not driven by high exports. They've been a massive consumer of raw commodities, much of that driven by infrastructure investment. That investment is now slowing.
3. Lower commodity prices lower the basic costs... Once again increasing disposable income. Cheaper gas, cheaper lumber, cheaper copper, all of those go into major things we buy/build, making houses cheaper to build/renovate, cars cheaper to drive etc...
I agree with you about the consumer spending, but she also alludes to that at the end of the video, that she doesn't think they'll pour it into houses/upgrades like they had been. |
An Economist you can understand, but do you want to?
