Remember back to 2009, the depths of the Great Recession, when unemployment was above 9 percent and the American auto industry was in danger of collapse? Scary times. But you didn't lose faith in the American economy, did you? At least we hope you didn't empty your 401(k) plan and liquidate any stock you owned. Because long-term savers and investors have a milestone to celebrate.
It's been more than nine years and five months since the dark days of March 2009. Since then, the S&P index is up about 320 percent.
While technical definitions of a bull market vary, and this year's market has been bumpy, the big picture outlook for the economy is bright. That's why Wall Street keeps betting on stocks. Unemployment is 3.9 percent. GDP growth hit 4.1 last quarter. Employers are investing in their businesses and consumers are spending. Happy days!
If one corporation is a proxy for the financial state of mind of the typical American, it might be Walmart. This recent comment from Walmart CEO Doug McMillon caught our attention because it was so optimistic: "Customers tell us that they feel better about the current health of the U.S. economy as well as their personal finances," he said. "They're more confident about their employment opportunities."
There are plenty of reasons for the trifecta of strong economic growth, lots of hiring and a bull market for stocks. Certainly, Republican-led tax reform is helping. A major purpose was to reduce the tax burden on corporations to bring tax rates more in line with competitors. Another goal was to encourage more business investment. But that's not all: The underlying state of U.S. businesses is healthy and profits are up. Some companies are raising prices on goods, which isn't necessarily a bad thing. It's part of being in a robust cycle.
Editorial on 08/25/2018