Why The U.S. Economy Could Keep Growing Until 2020

The Chinese market is suffering a slowdown, Latin America is imploding and “geopolitical threats are on the rise.” “The U.S. stock market is off to its worst start this year, yet many optimists believe the market will improve.”

Here are a few key factors that optimists believe will help Americans withstand current economic conditions.

1. Fundamentals are solid: The latest economic reports suggests that the American economy continues to look like the best house in a bad neighborhood.

2. Fewer Americans are drowning in debt: Consumers have been hard at work repairing their balances sheets.

3. Corporate America isn’t overly exuberant: Morgan Stanley sees little evidence that CEOs have overextended themselves into a situation that will create a bubble.

4. Big companies have also dramatically improved their balance sheets.

Of course there is no guarantee that the economy will continue to improved. “After all, few in 2006 thought the U.S. was about to enter its worst recession since the Great Depression.”

A Bear Market That Might Bear Some Fruit

U.S. Stocks have fallen nearly 4.0 percent so far in 2016 and it may get worse before it gets better.

The sluggish start “doesn’t necessarily point to a year of losses.” “January often is a bad month for stocks and all of the most recent selling has beaten down some shares low enough to interest selective investors.”

The average stock in the S&P 500 is off almost 21.3 percent from its 52-week high. The lows seen in August 2015 were partly triggered by worries over a slowdown in China’s economic growth, and “this remains a concern as reflected in a further slide in the Chinese yuan on Thursday.”

“There are other geopolitical factors that have affected the markets; tension between oil producers Saudi Arabia and Iran and a nuclear bomb test by North Korea.”

“The recent declines in U.S stock prices also raised concerns that a weak January could result in a down year for stocks, “but there is scant evidence for that idea.” Although the markets have gotten off to a rocky start, it is not time to give up on them yet.

Dow Dives 400 Points

The Dow declined 400 points, while the S&P 500 lost 2.2% and the Nasdaq dropped 2.8%. “Fears of a crash landing in China’s economy sent stocks diving around the world on Monday, the first trading day of the year.”

The Shanghai Composite plummeted nearly 7%. The latest trigger was a “new manufacturing survey that fell to 48.2 in December following two months of stabilization.” Even though the manufacturing report was disappointing, it’s just the latest sign of a slowdown in China.

A Must-Own Holiday Stock

The holiday season is in full swing, “but it’s not the retail socks you should be focusing on.”

This is peak season for FedEx (NYSE: FDX) and United Parcel Service (NYSE: UPS). “FedEx and UPS will win this holiday season for a number of reasons.” “First is the fact that there are more people shopping online, and the National Retail Federation has online holiday sales rising 8% this year, faster than 5.8% in 2014.”

The second reason that UPS and FedEx will gain momentum is that more stores are looking to unload inventory and carry less product going forward. “Retailers are increasingly pushing online sales and UPS and FedEx are positioned to benefit from an increase in smaller deliveries made from the manufacturer or wholesaler.”

Fed To World: Prepare For December Rate Hike

In a speech Wednesday, Fed chair Janet Yellen stated the economy has been improving in recent weeks.

“On balance, both economic and financial information received since our October meeting has been consistent with our expectations of continued improvement in the labor market,” said Yellen. However, she stressed that the Fed will move slowly and cautiously in 2016. “The two main factors holding the U.S. economy back are the weak global economy, in China and the strong U.S. dollar, which affects American exports.”

Janet Yellen also emphasized how far the economy has come since unemployment peaked at 10% in October 2009. Now unemployment is down to 5%, which is “near normal.”

“A Fed rate hike in December–or soon thereafter–“will be a testament..to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession, she concluded.

7 Things You Need To Know About The Debt Ceiling

Congress must decide about raising the ceiling on how much debt the federal government may carry.

“The debt ceiling is a cap set by Congress on how much the federal government may have in outstanding debt.” “Raising the debt ceiling simply lets Treasury borrow the money it needs to pay all U.S. bills and other legal obligations in full and on time.”

“Raising the debt ceiling is more like a license to continue paying what the country owes.” If Congress does not raise the debt ceiling, it will cause a disruption in Washington and investors and other countries will lose confidence in the United States. “To pay bills and benefits in full and on time, Treasury must borrow money to make up the difference between what it spends and what it takes in.”

Lagarde Says Fed Must Be Sure Of Jobs And Prices Before Moving

The U.S. Federal Reserve must be certain that the job market is stable and inflation is strong enough to justify a rate increase, the head of the International Monetary Fund stated.

“The IMF thinks that it is better to make sure that the data is confirmed, and that there is no uncertainty, neither on the front of price stability nor on the employment and unemployment front, before it actually makes a move.”

Fed Vice Chairman Stanley Fischer stated, during a briefing to G-20 officials that “the numbers in the U.S. are excellent because unemployment went down from 5.3 to 5.1 percent, which is an excellent number, but the 173,000 jobs added in August was not accurate data.”

Consumer Sentiment In U.S. Declined In August To Three-Month Low

Consumer confidence declined in August to a three-month low as recent market tumult weighed on Americans’ outlook for the U.S. economy. “Confidence withered in the second half of the month after U.S. stocks plunged on concerns about the Chinese economy.”

New York Fed President William Dudley told reporters on Wednesday, that the sentiment index would be the first economic indicator “where you might start to see maybe a little bit of an effect” from the market fluctuations.

Tsipras Meets Aides Amid Speculation Over Early Greek Elections

Greek Prime Minister Alexis Tsipras will meet with members of his cabinet in Athens, as speculation grows that he is poised to call early elections “in a bid to return to power with his authority strengthened.”

“Greek stocks and bonds dropped on Thursday as Tsipras met with allies to plan his next move after the approval of a bailout of 86 billion-euro ($96 billion) from the European Stability Mechanism rescue fund.”

How Big Is Iran’s Secret Stash Of Oil?

One of the biggest questions that many Americans are wondering is just how much oil is Iran hoarding at sea.

“Iran claims it’s not stockpiling oil in tankers in the Persian Gulf, but no one believes it.” “Up until recently, energy experts thought Iran’s vessels held 30 million to 40 million barrels of oil.”

Technology has determined that Iran is actually hoarding 50 million barrels of oil. “The larger estimate is an indication that the world has far more oil than it needs, especially given the slowdown in demand and turbulence in China.”

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