With the election coming up, many people are becoming more and more interested in learning how the political sector in Washington affects consumer confidence in the United States, and ultimately around the world. There are a number of people who feel, for example, that consumer confidence will remain on the lower side until at least after the November presidential election. Last night, VP running mate Paul Ryan said, “We will not duck the tough issues – we will lead. We will not spend four years blaming others – we will take responsibility”. How Ryan plans on doing this still remains unclear.
Nevertheless, another aspect to consider is how the prediction of consumer spending will ultimately affect local markets, such as residential real estate. A great number of business owners state they are still reluctant to reinvest capital into the current economy (PollingReport.com). The value of the dollar, combined with a volatile market, continues to demonstrate that this way of thinking creates a sort of ‘feedback circuit’. With such uncertainty in the air, it is becoming more and more evident to me that a great number of people waiting to make a major investment, such as buying a home, or expanding their business, are waiting. In turn, this makes things even worse. But, perhaps they believe that things will be better after this November.
In my opinion, the markets are not as affected by these things as some economists and journalists would try to make one believe. When it comes to an overall view of the economy, people take the market and interest rates into consideration, of course. However, do many consider political and social factors as well? I do not think it is a valid concern for most informed investors and buyers. At the basic level, the jobless rate in this country is often cited as being the result of low levels of confidence; but they ignore crucial issues, like the fact that many of these jobs have been exported, or no longer exist. Those types of hard facts influence the market far more than a sociopolitical one. This is the main reason why I would continue to ask the candidates, “How do you plan on lowering the jobless rate?”. I still have yet to see a satisfying answer.
So, it will be very interesting to see what happens to consumer confidence after November.
What do you think?
-David L
David Lombardo - Albany, NY 