There’s quite a lot of optimism in the news these days regarding the American economy. The suggestions are that the debt hangover is subsiding, banks will loosen lending, business profits will be up, unemployment continue to go down and America will be a better place, at least financially speaking.
The optimist in me is buying it, mostly. There has been an awful lot of slack in the rope when it comes to the economic recovery. Business and people have been cautious the last 5 years. Bitten hard by the depth of the crisis in 2008, it has been difficult to revive risk taking, therefore, the economy.
But home purchases are up, debt levels down to near pre-crisis levels going into 2014. That spurs other bits of the consumer driven economy. Along with moderate job stability, the American worker (and there are still many out of work) feels better.
There is a new boss at the US Federal Reserve Bank, Janet Yellen. She is in charge of an unprecedented situation globally in regard to market engineering by federal banking systems. More so than probably any of her predecessors, she has a lot of unknowns on her plate. She will have her hands full carefully straddling the divide between pumping the economy yet not letting those inflationary tactics pop the recovery.
Which way do you think the markets will go in 2014? Have the records been set and now it is a time for a correction? Or is the S&P 500 and the US Economy primed for another record setting year?