The current economic situation in the US is a bit sluggish, which is a bit confounding given the stimulus the Federal Reserve has exerted in the past number of years. Those years of easing are coming to a close, with the Fed slated to raise interest rates in December of this year. But the question lingers, why hasn't the economy picked up very much and why is the consumer still acting hesitantly? I believe the answer comes in a few different aspects of the economy.
#1, uncertainty due to the terrifyingly vicious political climate. We are all aware, and sick of, the election cycle this year, but it has created a lot of uncertainty in the economic realm. Will the Democrats gain a majority in the executive and legislative bodies? This could create a very different outlook from what we have become accustomed to in the last 8 years. And not necessarily for the economic better.
#2 Health care costs. In most places health care costs with Obamacare have continued to increase with 2017 premiums looking to spike in many states. As an example, my health care costs were $308 in 2014, Obamacare quotes are $768 last year and are slated to be $1078 in 2017. That is a 350% increase (for a worse plan) in just 2 years! This is completely unsustainable and something needs to be done. In terms of consumer economic uncertainty, this one factor is the most important. Why would I, or anyone, spend freely when my after tax health care costs are so unpredictable? Both parties seem to agree that the health care system in the US is broken, but hopefully someone has a plan for fixing it. The other aspect of Obamacare that is misleading is the number of people on its plans. I have never been on Obamacare, but since I applied they count me as one of their insured. How many other people are in this situation or had insurance for a month or 2 then cancelled? I would wager that those numbers are enormous and of the 10 or so million people they are counting, many fewer have had continuous coverage and re-enrolled. So, in actuality the problem it was trying to solve (getting insurance for those with pre-existing conditions who were otherwise uninsurable) is still a problem, and many other people are dealing with rapidly rising costs for no good reason.
#3 World Wide recession. Our economy is sluggish, but is still doing well in comparison to most other countries. Many European and Asian countries have negative interest rates. This creates a situation where that money is looking to go elsewhere, in many cases into higher yielding US bonds. That has made the dollar strengthen a great deal against other currencies. That is great for Americans looking to travel overseas, but not so good for our economy. When our products, services and real estate are more expensive due to the dollar's strength, fewer people invest here, which in turn hurts our economy. Luckily for us in Crested Butte, we continue to have an influx of people looking to invest here, and have never been effected much by global concerns. This should help us avoid the boom/bust of international investment and keep our market fairly steady.
#1, uncertainty due to the terrifyingly vicious political climate. We are all aware, and sick of, the election cycle this year, but it has created a lot of uncertainty in the economic realm. Will the Democrats gain a majority in the executive and legislative bodies? This could create a very different outlook from what we have become accustomed to in the last 8 years. And not necessarily for the economic better.
#2 Health care costs. In most places health care costs with Obamacare have continued to increase with 2017 premiums looking to spike in many states. As an example, my health care costs were $308 in 2014, Obamacare quotes are $768 last year and are slated to be $1078 in 2017. That is a 350% increase (for a worse plan) in just 2 years! This is completely unsustainable and something needs to be done. In terms of consumer economic uncertainty, this one factor is the most important. Why would I, or anyone, spend freely when my after tax health care costs are so unpredictable? Both parties seem to agree that the health care system in the US is broken, but hopefully someone has a plan for fixing it. The other aspect of Obamacare that is misleading is the number of people on its plans. I have never been on Obamacare, but since I applied they count me as one of their insured. How many other people are in this situation or had insurance for a month or 2 then cancelled? I would wager that those numbers are enormous and of the 10 or so million people they are counting, many fewer have had continuous coverage and re-enrolled. So, in actuality the problem it was trying to solve (getting insurance for those with pre-existing conditions who were otherwise uninsurable) is still a problem, and many other people are dealing with rapidly rising costs for no good reason.
#3 World Wide recession. Our economy is sluggish, but is still doing well in comparison to most other countries. Many European and Asian countries have negative interest rates. This creates a situation where that money is looking to go elsewhere, in many cases into higher yielding US bonds. That has made the dollar strengthen a great deal against other currencies. That is great for Americans looking to travel overseas, but not so good for our economy. When our products, services and real estate are more expensive due to the dollar's strength, fewer people invest here, which in turn hurts our economy. Luckily for us in Crested Butte, we continue to have an influx of people looking to invest here, and have never been effected much by global concerns. This should help us avoid the boom/bust of international investment and keep our market fairly steady.
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