Economic Mixed Messages
Tuesday, February 16, 2016 at 8:43AM By Chad Symens
This article recently caught my attention and the wheels started turning: http://www.cnbc.com/2016/02/11/is-the-us-economy-running-out-of-gas.html
The current economic situation is confusing to the casual observer. On the one hand, President Obama regularly speaks about the US economy being the strongest and most resilient economy in the world, and yet articles like this create doubt in the minds of the average observer. Gas prices are at historic lows, and the unemployment rate is back down to pre-recession levels. Yet polls consistently show that Americans are unhappy with the the direction of the economy and the leading presidential candidates are outsiders running campaigns against the "establishment". Q4 earning and full year earnings are also confusing. Home improvement stores are doing very well, but department stores and large mass merchants are struggling. Today the Federal Reserve sent conflicting messages about the economy being strong, and the possibility of a recession is still out there.
What are we supposed to make of all this?
I'm no economist but my observation is the average American consumers are pulling back on discretionary spending and focusing on paying down debt and putting some extra money into their savings. Home improvement retail sales clearly show consumers are investing into their homes and taking the savings at the gas pump and putting it into their homes or their savings accounts. Depending on your point of view this can be both positive and negative considering US consumers have historically had higher levels of debt than other countries. But the debt level of the US consumer is rapidly decreasing. Does the generally conservative approach to finances mean consumers, who drive the economy, are pulling back and won't help to sustain the economic recovery?
Business at Accelerated Analytics has been expanding exponentially in the last 90 days. We are seeing companies across multiple retail channels invest into analytics and reporting because they understand that to win at retail they have to be smarter and faster than their competition. Those businesses are investing into productivity and technology, not pulling back. These businesses are small, medium, and large. They represent a good cross section of the economic landscape and watching them invest makes me optimistic. I believe the economy is going through a routine cycle of smart and successful companies growing and investing and conservative companies that only risk and fear pulling back. To me it seems to be a very Darwinian cycle where the smartest and strongest will thrive and the weak will struggle and possibly fail.
I'm bullish on the economy's prospects. What do you think?