Future Economics & Outlook for Business Owners
Michael Hartnett, the chief investment strategist at Bank of America Merrill Lynch, notes "stocks have now outperformed bonds for seven straight years, something that has only happened three other times in the past 220 years. The last was in 1929." Investors are experiencing the second longest economic expansion in U.S. history. If the current economic expansion lasts for another year and a half, it will be the longest on record. We all know what happened most recently to the economy in 2008.
What is Driving Growth in the U.S. Economy?
- Global economies are expanding after years of stagnation. The International Monetary Fund (IMF) forecasts global growth of 3.6% (2017) and 3.7% (2018). Global sales of U.S. companies have been soaring.
- Worldwide low inflation rates are due to low commodity prices for oil, gas and materials, as well as, an aging worldwide population and a slowdown in population growth.
- A rise in U.S. manufacturing and the use of manufacturing technology has dramatically caused the U.S. to become the second-most-competitive country in the world, moving up to an eight-year high in global rankings according to the World Economic Forum. U.S. manufacturing surged to a 13 ½-year high in September.
- Even with the three major hurricanes, Q4 2017 earnings growth for the S&P 500 Index are expected to be 11.4%. The U.S. housing market has recovered from its near-death experience in 2007 and 2008.
- Final GDP growth numbers were revised up to 3.1% in the second quarter of this year.
- U.S. jobless claims are now at a 44 ½-year low. This decline in the number of Americans filing for unemployment benefits points to a strong rebound in job growth. Source Reuters
Is it a good time to sell?
The business climate and general performance of most businesses mirror the underlying fundamentals of the U.S. economy. If the economy is trending up and expanding, the value of most businesses will follow. If your plan is to exit in the next 2 years, you may want to expedite the process. If your exit plan is further down the road, just be prepared for less favorable conditions.
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