The “Wait and See” Economy

The dog days of summer are over, kids are going back to school, but the economy and the stock market still seem stuck, up just slightly since Memorial Day. Interest rates are low, inflation is lower, and stocks are cheap compared to historical averages. So what is holding things back?

We seem to be stuck in a “wait and see” economy. Consumers are postponing buying a house or other major purchases until things get better or they get that new job. Businesses are delaying hiring until sales get better, but sales remain sluggish because consumers are not spending. It leads to a vicious cycle and in general everyone is taking a “wait and see” attitude-which leads to an economy that is just plodding along.

Even policy makers at the Federal Reserve and Congress are taking the “wait and see” approach. The Fed is waiting for their low interest rate policy actions to take full effect and Congress now seems to be waiting on November elections before taking additional actions to boost the economy.

The good news is business cycles eventually end, and though not every piece of news on the economy is great, the long-term trend is still going in the right direction. Patient investors will be rewarded!

Have a great day!

Bob