“It was the best of times, it was the worst of times” begins “A Tale of Two Cities” by Charles Dickens.
Four out of 10 Californians are living at or near the poverty line. Others, of course, can be found throughout the United States. Still, what I’d like for you to think about for a moment is that 2018 may be the best year of your life, at least economically.
Many economic indicators are at records we haven’t seen for a generation or longer. Some, such as the unemployment rate for blacks and Hispanics have recently reached the lowest rate ever. Small businesses are more optimistic than at any time since 1983. For the first time in recorded history, there are more job openings available than job seekers. The overall satisfaction with the direction of the country is the highest in over a decade. This year American companies brought a record $300 billion of corporate profit back into the United States and subject to federal taxation. Wages have grown faster in the past year than any time since 2008.
There is a very good chance that the number of people employable in your household is the highest it has ever been. So, now is the time to save for a rainy day. The United States is long overdue for a recession. We are also seeing unusual growth for this late in an economic cycle. Fortunately, recent federal policies are allowing this unprecedented financial benefit, but history cautions us to be prudent.
Moreover, for the past couple of years, the Federal Reserve Board has been removing the manipulated elements that have propped up the American economy since 2009. The Fed is starting to “burn” some of the extra money they printed during the Obama administration. The Fed is also slowly raising interest rates that they kept artificially low. These two retrenchments will create strong head winds against economic growth.
On the plus side, if we can continue to deregulate and not strangle employers with bureaucracy, keep fracking to produce American oil (which has also allowed the United States to lead the world in CO2 emission reduction in 2017), and move people from welfare to employment, we have a chance at continuing to increase the quality of life in America.
It is too risky to think that these good economic times will continue for long. Are you reducing any debt you may have? Instead of expanding your expenses with any overtime pay or regular hours you may be receiving, first make sure you are decreasing the risk of a financial calamity for your household. Particularly, if you have credit card debt or have loans against your furniture or other possessions, reduce or eliminate these financial burdens as quickly as you can.
Then, tuck away as much savings as possible. After all, some day in the future, we may look back at 2018 as the good ol’ days. Even if the favorable economic conditions continue, these moves will be helpful to shore up your financial situation for any future.