LET'S HEAR IT FOR "GOLDILOCKS!"
An old girlfriend of Wall Street's seems to be back in town. She's been around for a long time — some people thought she left, but apparently she really didn't, and now that people are acknowledging her presence again, she is almost as gorgeous as ever.
I am talking, economically speaking, about the so-called "Goldilocks" economy that we have right now. Wall Street's Goldilocks doesn't come with three bears — in fact, Goldilocks is a "bear repellent." What Goldilocks does come with is an economy that continues to show above-average growth, with historically low rates of unemployment and inflation. She is, in short, the best of all worlds.
Our Goldilocks had a personal computer, and she is tied into the Internet. She is a "with it" kind of gal, to say the least. She understands the technology that is driving our economy, making people more productive, and allowing workers to earn more and at the same time, allowing businesses to be more profitable.
She understands the Internet connecting people to people, businesses to businesses, and buyers to sellers, virtually worldwide, from anywhere to everywhere. She understands that the Internet continues to put pressure on prices; a consumer willing to do even a little homework can almost always find just about whatever they want for a price they're willing to pay.
Goldilocks also comes with parents. They are baby boomers; now the baby boomers are mostly turning 50, and in fact, over the next 15 years, every 15 seconds someone in this country will actually turn 50. Something wonderful happens when people get into their 50s. They are probably at their peak level of earnings, and at the same time, their expenses start to slow down. Home mortgages tend to get paid off, usually in your 50s, and one's children generally are graduating college, and those heavy expenses trail off. Or, one's children are in the workplace and again, parental responsibilities diminish.
Goldilocks understands that more and more her baby boom parents are trusting Social Security less and less. They are taking financial control of their own future retirement and they are pouring money into every possible savings place they can find. They are investing in
401(k)s, 403(b)s, and Roth IRAs, and they understand that Social Security will not — was never intended to be — their entire retirement plan.
Goldilocks also understands that our vibrant economy is actually being pushed by the American consumer. She knows that somewhere between two-thirds and three-quarter of the nation's Gross Domestic Product comes directly from consumer spending. With the economy growing strongly, unemployment at record low levels, and interest rates at likewise historically low levels, Goldilocks realizes that we are in what Fed Chairman Alan Greenspan has termed a "virtuous circle."
As I said at the beginning, Goldilocks is an attractive and intelligent young girl, and she and her little dog, "new paradigm," and her baby boomer parents will hopefully continue to live, if not happily ever after, then, for at least the foreseeable future.
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By the way, if you doubt the Goldilocks story, all you have to do is remind yourself what happened at the beginning of this month to the Dow Jones Industrial Average. Four old-line, relatively stodgy companies were dropped from the list of 30, and the four that were added were definitely of the "new paradigm" variety. They were: Home Depot, Intel, Microsoft, and SBC Communications. The latter three certainly scream "high-tech" and "Internet," and are the stuff that is driving the economy right now.
For the Dow Jones to especially include, for the first time, non-New York Stock Exchange companies in the Industrial Average, namely Intel and Microsoft, is a clear admission that they understand where this economy is going and how it is going to be changing and evolving in the years ahead.
(Tom Butenhoff is a First Vice President with J. E. Liss & Company in Milwaukee. The views are his and not necessarily those of Liss Financial Services or the Job Connection/Hiring Network.)