March 31, 2016

Mixed-Economic-Forecast

  • Our call on the price of oil last year was right on the money saying it would dip below $30 dollars per barrel. Since then it has come up a bit and we expect to bounce around 40 for a while and then go below 30 again as uncontrolled producers try to generate revenue.
  • We said any interest increase by the Fed was a mistake and it seems that now the Fed even agrees pulling back from its plan of four increases this year.
  • Contrary to all reports about declining unemployment, the economic crunch continues to be real to the point of it now impacting the wealthy with luxury brands feeling the pinch. Everyone wants a deal and that is bad for retail.
  • Who can afford a new home? The top 5% have done it and now the rest of the country sits wishing their incomes were going up while expenses rise. We see no significant growth in new housing this year. The process is broken.
  • Continued cutbacks in China and Europe will cause commodity metal prices to sink lower this year with copper and aluminum declining further – we said that last quarter.
  • We also said last fall that auto sales would peak and indeed they have. As prices go up that new car smell can’t attract potential buyers. A key factor is that at both ends of the age spectrum there is less interest with seniors trimming budgets and millennials not all that enthralled with autos and instead wanting to pay down college bills.
  • This should be the year where insurance companies stick it to everyone regardless of what’s insured. Homes, cars, boats, bodies – it doesn’t matter, premiums will be going up faster than ObamaCare options.
  • Last year we began to talk about Blockchain and the more we learn the more we begin to think that the banking industry is in for a momentous change where big bank revenues will take a hit.
  • If you have been a reader of our Economy Notes then you know that one of our big concerns continues to be inner city crime which has a huge impact on a city’s growth potential. Nobody is addressing this out of control situation for fear of not being politically correct. In today’s world you can’t call a duck a duck. That said, the most outspoken individual these days is Presidential candidate Donald Trump. He has a long list of pundits that have not taken him seriously but as he gains momentum we see him having an opportunity to win over the minority vote by focusing not on equality but on putting an end to the senseless black on black violence that has been allowed to run rampant. Trump will focus on the promise of real jobs and that is the one thing that can help turn things around.
Economy Notes provided by Seabreeze Enterprises