FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
December 26, 2017
David Einhorn's Greenlight Capital returned -2.9% in the second quarter of 2021 compared to 8.5% for the S&P 500. According to a copy of the fund's letter, which ValueWalk has reviewed, longs contributed 5.2% in the quarter while short positions detracted 4.6%. Q2 2021 hedge fund letters, conferences and more Macro positions detracted 3.3% from Read More
- Holiday Greetings & Why I’m a Very Lucky Man
- Consumer Confidence Soared to 17-Year High in 2017
- What’s Behind the Explosion in Consumer Confidence?
- Keep All Your Financial Information in One Secure Place
I sincerely hope that you and your loved ones had a joyous Christmas or whatever holiday you might be celebrating. We had a great one! The kids all came home, including our new daughter-in-law who joined the family in May (married our son, the oldest at 27).
As I get older, I cherish these times when all the family can be together more and more. I guess that’s not unusual, but I grow increasingly proud of our kids and their continued accomplishments, both professionally and spiritually. Add to that my 31-year marriage to Debi, my wife, business partner and best friend, and I am a very lucky man!
Due to the holidays, today’s E-Letter will be shorter than usual. Let’s get started.
As we approach the end of the year, I always like to look back and think about the most important developments we have seen over the last 12 months. There are a lot of things I could point to as significant positive developments, both economically and politically this year.
Yet in my view, the explosion in consumer confidence has to be the number one positive development in 2017. Consumer confidence has risen this year to a 17-year high. The surprising thing is that most economists and forecasters don’t seem to know why this happened. That in itself is very interesting.
I’ll round-out today’s abbreviated E-Letter with a reminder about something I wish every one of my clients and readers would do as a New Year’s Resolution, if you haven’t already. I’ll tell you what that is as we go along today.
Consumer Confidence Soared to 17-Year High in 2017
Consumer spending makes up almost 70% of Gross Domestic Product and is by-far the greatest driver of the economy. Consumer confidence acts as both the accelerator and the brakes on consumer spending.
As you can see in the chart below, consumer confidence plunged from late 2000 to early 2003 in the wake of the bursting of the “Dot.Com” bubble. You can also see that confidence never returned to anywhere near the 2000 high. Then it collapsed again from late 2008 to late 2009 to a new low.
Since then, however, consumer confidence has exploded to the highest level in 17 years, as of late November, according to the US Conference Board. We’ll get the latest numbers for December next week, and most forecasters are betting on another improvement this month.
This is a clear indication that most Americans are feeling more confident about the economy. The Conference Board’s monthly survey asks Americans two questions: 1) how they feel about the current economy; and 2) how they feel about the economy and job prospects over the next year.
The share of respondents who currently see jobs as plentiful rose to a 16-year high, while the share expecting more jobs will be available six months from now was the highest in eight months at the end of November.
These readings led many forecasters to predict the best holiday shopping season in many years in 2017, and we are seeing plenty of preliminary evidence that this has in fact happened.
What’s Behind the Explosion in Consumer Confidence?
Referring back to the chart above, we see that consumer confidence has been accelerating since late 2009. Much of that acceleration was due to the fact that the Great Recession and the financial crisis drove consumer confidence to the lowest levels in the last 40 years.
The recession of late 2007 to early 2009 was the worst economic and financial downturn since the Great Depression. Not only did millions of Americans lose their jobs, but the severe bear market in stocks erased trillions in net worth.
Yet despite multiple tax increases and greatly increased government regulation during the eight years of the Obama presidency, consumer confidence managed a significant rebound nonetheless. This was in part due to the media’s love affair with President Obama, which many Americans bought into, despite higher income taxes and more government regulation.
Returning again to the chart above, we see that consumer confidence vaulted to its second highest level in the last 40 years just before and after the election of Donald Trump in late 2016.
As I have said often in the past year, I am not a big fan of Trump. But I do believe that his agenda of lower taxes and deregulation has significantly contributed to the recent sharp advance in consumer confidence – which has led to the strongest economy in decades.
I’ll leave it there today. And now we move on to the one thing I wish all of my clients and readers would do as we head into another New Year.
Keep All Your Financial Information in One Secure Place
With the holidays upon us, I want to remind all of my clients and readers that we have a great tool for keeping all of your financial information digitally in one safe, secure place. It’s called Handing Down Your Legacy and it’s FREE of charge from Halbert Wealth Management.
The idea is to have all of your financial information (account numbers, contact info, etc.) in one safe place for easy access. When there are changes to any of your financial information, you can easily update your record to keep it current.
Most of us have our financial records scattered in many places and various files. In most families, there is one spouse who keeps up with these financial records, and too often the other spouse is unaware of where these records are kept. This can be a virtual disaster if the primary recordkeeper passes away.
We have the perfect solution for keeping track of all of your financial information in one secure place. And we offer it to our clients and readers free of charge.
You can download either of two digital versions of Handing Down Your Legacy -- one in Microsoft Word format and a second that can be completed using the free version of Adobe Reader (available at www.adobe.com).
Either version can be used to save your important information. The file can be password protected and then be easily stored on a removable disk or flash drive and placed in a secure location that can be accessed by those who need it.
Download your FREE copy of Handing Down Your Legacy today. I really, really encourage you to do this and make sure your chosen loved ones know where this critical information is stored. I also recommend that you encourage your loved ones and friends to download Handing Down Your Legacy to store their own financial information in one safe place.
Remember, this valuable tool costs you nothing.
You know you need to do this, so do it today. You will be so happy you did!
Happy New Year,
Gary D. Halbert