We generally want the indicators of the economy’s direction to move and, if possible, to move UP, so the profits are rising for most investors and the economy’s direction, based on the strength of the upward moves, is reassuringly positive.
But there are times when we are grateful for slowly moving, nearly static economic indicators. Sort of “no-news-is-good-news” times. In fact, the “no-news” aspect of the week’s indicators may suggest that the economy’s strength can withstand rising doubts about its ability to withstand any negative news.
There are several ways of looking at last week’s economic indicators, as an example. One–and this isn’t a joke–is to ignore them. They haven’t moved; their lack of movement may well mean that there is nothing to analyze here. By and large, most people will give them a look and just move on. After all, if there isn’t any movement–any vibration catching the eye–we often just don’t see what is right in front of us.
Interest rates, barely a move. Oil, slight downward move. Gold, another slight downward move.
Is all (or any) of this bad news? Arguably, it is not. We see the real estate market and the American economy holding itself together well in the face of very uncertain international political developments. While that doesn’t suggest that our economy is about to boom, it does hint at just how strong our economy is at this point. In other words, if we’ve been anxiously awaiting an upward spike among certain indicators, we may have missed the fact that our economy has been dodging threats and doubts that could fairly easily have caused ominous plunges to occur.
Is this an example of rose-colored-lens analysis? Perhaps, but there has been plenty to be concerned about and, indeed, plenty remains. The apparent good news is that our economy is standing firmly enough on its own feet to keep its balance when things get a bit dicey.
If this analysis is correct, we may want to anticipate an economy that shifts rather quickly into a higher gear when (and if) coming events cause investors to gain more confidence.
Meanwhile, time to go sailing in a well-stocked boat…and enjoy being becalmed once again. Things could be a lot worse, and indeed, they appear to be getting better–albeit gradually.
Average Interest Rate
30-Year Freddie Mac Fixed-Rate Mortages