A couple of weeks ago we posted about how the US economy is not as terrible as many people think it is. We got a ton of comments telling us we were wrong. But, as you can see from this chart, on a relative basis, the US economy is doing great.
Despite the constant chatter of a large recession about to hit us at any moment, the US economy continues to chug along. It was recently announced that the economy grew at an annual rate of 4.9% in Q3, which was the fastest pace in a couple of years. (This number is adjusted for inflation, so the growth was not due to prices being higher).
A lot of the doomsday predictors will remind us of all the bad stuff on the horizon: upcoming political showdowns, wars, lots of debt, really high interest rates, and so on.
The unfortunate truth is that the world is always filled with bad things that seem like they can take down the economy at any moment. But it’s important to also remember all the positives of the economy too, like strong job growth, lower inflation, a resilient consumer, technological innovation, and much more.
What will the economy do going forward? No clue. But since economic growth is not in our control, it’s best to focus on the variables that we can control. Ignore the noise of people guessing where the economy is headed and focus on saving a good portion of your income and investing it in low cost index funds every month.
The graph shows the gross domestic product (GDP) percentage change on a quarterly basis, indexed to the fourth quarter of 2018.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.
-Vivi & Shane
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