New economy and leading indicators in a flash.
Economy currently between $7.5-8.0 trillion, is expected to average 3.5% growth annually. Supply side is steadily declining. Demand side is increasing by population increases and obsolescence and repacement of goods and services.
Leading indicators of productivity, inflation, interest rates and liquidity are the most significant factors.
In business, productivity is measured by sales revenue per employee, not wage cost, but automation. Inflation is measured by willingness to pay for goods and services, and not by real prices. (real prices vary in seasons, location, supply and demand etc.) Your might say inflation is a function of liquidity. ( My wife can show you how inflation works depending on how much money I gave her) Liquidity is the extra cash in the system to provide higher standard of living, which is the growth in economy. But not neccessaryly M1, M2, M3 that Federal Reserve Bank considers. Liquidity is part of FEDS monetary policy. But, it is also provided by earnings of businesses. Interest rate would modify liquidity and cause earnings decline. Optimum interest rate can provide cheap money for investments, also attract world wide investment to the host country.
These indicators are now stable and not changing very fast. Which means business and living conditions are ideal. Investment in stocks depends on individual company and its future revenue and earnings growth. we should be looking for companies beyond 3.5% growth for aggressive investment. |
