Financial Planning

Six shocking economic trends and how they affect us

Six headline-grabbing trends jumped out at me from the news recently and so I clipped graphics from The Wall Street Journal to illustrate the points. All seem to have potentially large economic impact for ordinary Americans and small businesses. My specific purpose is to consider the effects these trends might have on my own life and business in the near term. Yet as shocking and disturbing as these six trends are, it is still difficult to distill clear action plans in response.

 

#1. Stock Market Correction Ahead

A shockingly high number of investment managers feel that the stock market is overvalued. This is fueling the increased interest in alternative investments like my aquaculture business.

#2. Real Tax Reform is Dead

Investors have given up hope for a reduction in top tax brackets which was the primary goal of tax reform. Republicans are now focused on simplification of the tax code (I call it ‘political window dressing’) instead. Tax experts point out that simpler is not better for us since tax calculations are all done by computer anyway. Tax code is complex simply because the world is complex. (Computers that perfom tax calculations don’t care if the formulas are complex).

 

#3 Trump is sunk.

President Trump is more unpopular than ever before. He is unlikely to be effective at these unprecedented high disapproval ratings combined with such a low approval rate. Supporters will continue to argue but little is likely to be accomplished on the Trump agenda.

#4. Bitcoin’s Role?

Bitcoin is surging especially in Asia. I have a bitcoin account and own a little, but should I consider the possibility of using it in ordinary business? Is there potential to use bitcoin in my cash-based businesses? (I still doubt it).

#5. Debt is Growing

Debt in the United States is shockingly high and growing higher. Government debt, consumer debt, student loan debt, unfunded pension debt, unfunded social security obligations, etc.  Yet it is not clear what that means to ordinary citizens in the shot tem. (We don’t expect it to be a good thing).

#6. Obesity and Health Care

Americans are growing more obese. We know that obesity is causing a spike in health costs but we’ve not yet seen a sharp change in early death rates. People seem to be living long but less productive lives. I’ve been a supporter of sugar taxes while most tax experts are not because it is a regressive tax hitting lower income people hardest.

 

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