Today I attended a presentation by BBVA Research’s Chief US Economist, Nathaniel Kerp, in which he discussed economic trends in the US for 2013.
The overall theme is that the Federal Reserve is trying to convince the public to take risks. I am not sure that is a good idea. Warren Buffet has said that most people borrow money in the good times and try to pay it back in the bad times when their income is reduced. He says you should do the opposite. Borrow money when times are bad and pay it back as the economy recovers. My question is have we missed the window for the time to borrow?
Below are some other interesting economic trends:
* US exports are greater than US investments.
* The top three concerns for small business is Taxes, Regulation and Sales, in that order.
* The US Personal Debt to Income Ratio is back to it’s long term trend line.
* Can’t have inflation with high unemployment and limited wage growth. ( no surprise there, but, good to be reminded.
* The Federal Reserve should start raising the fed fund rate in July 2015
* therefore. Lower interest rates for 2013 and 2014
* according to the World Economic Forum the US has dropped in it’s Global Competition Ranking from 2nd in 2009 to 7th in 2012.
My final comment, Is this the time to invest in the stock market? If the Fed’s liquidity drives stock prices up , then when they reverse direction ( which they will) will stocks drop?