Confidence in the economic strength is on the rise.
The term “animal spirits” was used by economist John Maynard Keynes in his 1936 book “The General Theory of Employment, Interest and Money” to describe human behavior that shows itself in economic indicators. Those indicators are our best mile markers of the economy.
Construction led the way in new jobs, with the category growing by 58,000 new hires.
Manufacturing also had a strong showing with 28,000 new jobs. Retail was down 26,000 jobs, which is not surprising considering all the recent retail store closures being announced.
Said John Canally, the chief economic strategist at LPL Financial, Shoreline Financial Partner’s custodian of client assets: “You’re getting more strength in the labor market than I would have anticipated.”
Jobs reports are not the only leading indicators that project confidence in future economic strength. Consumer confidence, another leading indicator, also has been steadily rising since the election.
Our country is still recovering from the Great Recession almost 10 years ago, but look no further than our historically low interest rates and you will find evidence of the lengths that our officials have gone to spur economic activity.
A comparison to the recent Great Recession was proposed by a mutual fund company that compared our recovery to that of the post World War II economic boom that occurred in the United States in 1946.
The main similarity is that interest rates bottomed at 2 percent, but there are a few other notable comparisons.
One thing is certain: We are not close to the manufacturing base of that era. Enter the Trumponomics agenda and suddenly the similarities increase. The proposed infrastructure spending, inflation and protectionary trade policies are looking eerily similar.
We are also looking at commodities at multi-decade lows and a strengthening U.S. dollar.
With those comparisons in mind, we had better buckle up because in the last 32 policy-rate hike cycles globally, local equity markets gained a median 12 percent in the 12 months leading up to the start of the new rate cycle.
And the median equity market rose 10 percent in the year following the initial hike.
We have a great deal to be optimistic about.
A new annual report (by top accounting firm PricewaterhouseCoopers) that surveys global CEO’s announced that for 2017, confidence levels are higher this year on all three time periods that were discussed – present conditions, 12 months from now and 36 months from now.
Danny Wood is an independent financial adviser with Shoreline Financial Partners. To learn more visit shorelinefinancialpartners.com.