US Economy News
US economy after a sharp rise in 2015 is returning to stagnation. The first quarter profits of all major companies are expected to be lower than expected. There has been also quite a large unrest in the education system, meaning many colleges may default and close down.
Should investors worry about the economic recession hitting their assets? They may surely check their portfolio and eliminate some high-risk positions. US market is following a pattern seen in 2008-2009, when the markets went into a downward spiral. To add to the uncertainty, Americans are vary of upcoming US Presidential elections, with Republican nomination under threat by an infamous billionaire, Donald Trump.
US Economy News: Unjustified expectations
Middle-class Americans in 2016 are feeling cheated, because of government's failed promise of a well-paying career after graduating from their colleges and in return they had not received anything, so they are going to the government with threats to have their student loans forgiven.
In recent months more than 7000 borrowers owing $164 million, addressed US government with a statement that their student debt must be expunged under an obscure federal law that had been applied only in three instances before last year.
Problem of student debts became the leading themes of pre-election campaigns of both leading parties.
US Economy News: What to expect in 2016?
After months of negative performance of US Dollar all the blame went on the Federal Reserve Bank. But in the upcoming months of 2016 the Fed states “don't blame us, blame China and the weakening energy prices”. That comes after some major plunges in US bonds and other key assets and may show that in the short term the US should be ready for more turmoil, both in the private and government financial sector. And there is no solution or reassurance to be found about the true state of the US economy.
That can be partially attributed to ever growing contributions sent out every year to the “developing world”, around $800 billion is expected to be written in checks with no real gratitude towards the USA. Which is at least 1% more then last year and far above the prognosis for US market growth. Coupled with humongous debt it seems the strongest reading of what to be expected.
This is truly unfortunate as the US Fed was unable to explain the above-mentioned expenditures and to reassure investors that the economy is not going to lie down and die in the future. It actually raised its overnight rates in December to promote savings by banks. But the financial specialists highly advised on the contrary – to go negative, and make the banks spend and lift the economy form stagnation.
But the unemployment rate is still there at 4.9% means an almost fully-employed economy, with the rest of people marginally working part-time. Household saving also remain high at 5.2%, meaning that three key driving points of the US economy: jobs, incomes and savings support the upward trend. But taking into account huge government expenditures and upcoming presidential elections, this may not be enough to sustain growth, or at least not to reverse the trend downwards.