I’m hearing more and more chatter about the “tale of two economies”. On the one hand, the stock market continues to hit all-time highs and the unemployment rate is extremely low. Spending at hobby and sporting goods stores, along with premium e-commerce sites is rising. Hospitality and tourism businesses are thriving. The well-heeled aren’t missing a step.
On the other hand grocery stores, clothing retailers, and plebeian discretionary spending outlets have scaled back their earnings expectations citing declining revenues.
Watching where people spend their money is a fantastic indication of how much they have and their overall feeling of economic well-being. GDP, which is the amount of money we spend as a country as a whole dropped 0.6% to 1.5% this most recent quarter. The expectation was for a decline of only 0.1%. And PCE, which measures household spending dropped from 4.1% to 3.7% in the last 30 days.
Housing is the king indicator whereby the overall health of the workaday economy can be measured. It’s one thing to go blow an extra $1,995 at Costco for a patio set, TV for the garage, and a 48 pack of Taki’s; it’s quite another to decide you can afford to increase your monthly housing expense by $2,000 for the next 30 years by purchasing your dream home.
I’m not saying you should be foolish with your money (though that 48 pack of Taki’s seems excessive). I do believe that the principles of hard work, conscientious investing, and carefully planning for a better tomorrow will yield a happier outcome than cowering in a corner and waiting for the other shoe to drop. So wherever on this economic equilibrium you may find yourself, there’s always hope for an even better tomorrow. Oh and one more thing, when it comes to wealth building in real estate, time in the market beats out timing the market—almost always.
