Week Ending April 30th, 2021
If you open, they will come… States that are yanking off the proverbial band aid “or should I say mask” are thriving and this is translating to a massive recovery despite Big Government’s threats and scare tactics of another outbreak.
What does it mean – GDP growth, job growth, consumer spending, factory production, low inventories, a housing boom, and strong banks. This compares to the economy in January 2020 when we had 3.5% unemployment and jobless claims were at 220,000.
The biggest impediment to a stronger and more vibrant re-opening… The government. Savings rose 27.6% (I cannot remember ever seeing a number like that) in March which means the stimulus payments were largely saved.
What does it mean… Top officials from Biden’s administration and Senator Joe Manchin are now saying, “that the overly generous unemployment benefits could keep people from returning to work.” Dah!!!
Excess unemployment benefits are impacting companies trying to hire back employees. In effect, we have allowed our government to compete with the free markets and job creators, making it a better option to stay unemployed than to go back to work. Why would your government want to compete with job creators? Why is our government giving more to people to stay at home than encouraging them to go back to work? As you know, we have been yelling and screaming about this since they started these programs.
Today, the reopening of our economy and the dignity of being independent and self-reliant faces an even bigger challenge lead by Big Government, more bureaucracy and a lean towards a more centralized economy. Universal Basic Income (UBI) has failed in every country that has tried UBI. Yet, many in power would like to see UBI here in the USA, home of the free and land of the brave. This is a trap for anyone wanting a better life.
Inflation… Will a reversal of policy by the current administration and more bureaucracy and higher taxes slow it down?
What does it mean – Commodity prices (wood, oil, steel, metals, etc.) are on the rise. Almost everything you can feel and touch is going up. There is a global container shortage and chip shortage. Technology has and will continue to hold inflation in check, but there is only so much it can do. Has D.C. forgotten the laws of economics or are they more focused on a centralized economy? When you raise costs, increase government bureaucracy and raise taxes, wages do not rise as much, and jobs get further replaced by technology. Period…Full Stop. Ask yourself, what do you want? How will you protect your future and that of your children? Are you willing to trade your liberty for the perception of safety and a downward spiral of mediocracy?
100 days – No State of the Union, but we did get to see our President… As I have always said policy matters.
What it means to you – We are now seeing how the new policies implemented through executive orders are going to impact our economic future and the decisions Americans will be forced to make. Many in CA, NY, NJ, IL, and MI are fleeing those states that have already implemented their own versions of higher taxes, more bureaucracy and more control of individual rights. Expect continued housing demands in Red states with low-income taxes that are pro-business and are commitment to individual liberties. For us who live in CA, the question will be are we willing to pay the premium for great weather and the beach as we see the homeless encampments explode under freeway passes, at parks, and in public spaces, along with the threat that sanctuary cities bring to our doorsteps? The rule of law matters, and it is driving companies and high-income earners and job creators out of CA.
We love your feed back and look forward to discussing.
Always at your service,
Doug De Groote, CFP®, MBA, CTC Managing Director