It’s Not As Bad As You Think

I subscribe to the Wall Street Journal and have been a reader of the paper since my senior year in college, when I was given a discounted student subscription.  I have never read it for insights into particular stock investments or investment ideas, but more for a pulse on business and the markets in general.  I also enjoy many of the views on the opinion page and resulting comments from readers in addition to their cultural section.  The weekend journal is also very robust and has an entire section on books, which I enjoy.  Often Joan and I will work on the weekend crossword together if she doesn’t go rogue and complete it herself.

All that to say, I read an article this week that caught my eye.  It was titled “Households Began 2022 in Stronger Financial Shape.”  Curious.  Stronger than what? I thought.  As it turns out, stronger than ever (at least since they have been polling and keeping track, which was 2013).  This is welcomed news and yet it did not make the front cover.  I would be willing to bet that you, dear reader, had no idea this was the case.  I had a sense the consumer is healthy.  I listen to analysts and strategists that tell me such things, but this article included a graph charting the relative health of the consumer since 2013.

According to the Federal Reserve, the percentage of adults who said that they were doing either OK or living comfortably was up to 78% as of the end of last year.  The highest on record (which is about 30% higher than they were in 2013).  This is not only good news for the families who saw the increase in OK’ness but for our current economic environment in which we find ourselves.  In my humble opinion, this news should be shouted from the mountaintops and spread far and wide.  Thus, the point of this blog.

Those of you who know me well, would likely regard me as a glass half full kind of guy.  I think I am as well, and in fact I try to see the good in any situation.  After eight straight weeks of declines in the Dow, a fella needs anything positive on which to cling.  Not only is this not the news of the day, and it should be, the exact opposite story is being broadcast over the airwaves all across the fruited plains.

Just five minutes of national news would be enough to scare the average person into believing that the next recession is imminent.  This is not just the financial news but on other programming as well.  We are bombarded with stories of fear, recession, fuel shortages, wage and price controls, historic inflation, food shortages etc.  You would think that it is 1974 or something.  It is crazy to me and also maddening.

So far, the consumer remains healthy and is undeterred by the negative news.  But my fear is that this story will become a self-fulfilling prophesy.  People start to believe the news and out of fear change their behavior.  In my mind it is a race against time, to see if the economy rebounds and the wheels gain traction to propel us forward before we begin to believe the bad news and tighten the belt leading us to our next recession.

Believe me when I tell you that I have one eye focused on the glass being half full and the other eye fixed on the horizon for the first signs of a major slowdown.  Recessions are not avoidable, and they are a necessary part of the economic cycle.  Just like the snow and cold of winter in Traverse City are unavoidable and part of the blessed cycle of our four seasons.  From my vantage the next recession is not likely this year, but I will continue to watch for any signs that my view could be wrong.

So, in the meantime, take comfort in the fact that more families are comfortable and doing ok than they were ten years ago.  It is not as bad as they are trying to make you believe.  When you get caught up in the negative loop of thinking, please reach out to me and I will give you the proper perspective.


*Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is not guarantee of future results. All indices are unmanaged and may not be invested into directly.