Categories

Economy & Politics

Tools

  • Economy & Politics
  • Investing
  • Personal Finance
  • Related Posts


    Price Of Seats Slashed At Obama’s California Fundraisers
    Welcome Back, Paul Ryan
    Europe Unveils Preliminary Sanctions Against Russia
    Things In The Middle East Are About To Get Much Worse
    Where China Goes To Outsource Its Own Soaring Labor Costs
    You Know It’s The New Normal When…
    America The Divided: Everyone Knows We Have Problems But There Is Very Little Agreement On Solutions
    Food Inflation Watch: California Farmers’ Water Costs Surge 700% After Government Cuts Supply
    The 10 Plagues That Are Hitting America Right Now
    Iraqi Oil In Context: 60% Of OPEC Growth Expectations
    ‘He Who Makes The Rules Never Goes To Jail For Breaking Them’
    Report Questions Motives Behind Post-Midterm Timing Of Obama Administration’s Next Wave Of Regulations
    Senate NSA Bill Could Come As Early As Next Week
    Maine Governor Curbs Public Assistance To ‘Able-Bodied’ Recipients Unless They Work
    Adani’s Ambitious Coal Mine In Australia Faces A Formidable Opponent—Nemo


    Running Out Of Cousins… The U.S. Boom Is Back

    "You’re going to run out of cousins," I told my house painter yesterday.

    It took him a minute to understand what I was saying. But once he got it, he couldn’t stop laughing. He knew I was exactly right.

    You see, my painting contractor is from Honduras. He does great work, and he does it with a big smile. He arrives on time and finishes when promised. As you can imagine, his business has grown.

    His workers are his cousins… from Honduras. As his business has grown, he’s simply called more cousins.

    I asked him yesterday how business is going.

    He told me it’s "booming." He said, "In addition to all of the new homebuilding, Bank of America now needs me to paint about 25 houses a month."

    That’s when I joked he was going to run out of cousins. Judging by the Cadillac he drove up in, he’s laughing all the way to the bank these days.

    Business is booming in my small town on the Florida coast.

    • New construction is happening again. We’ve quickly gone from too much supply and no demand to the opposite situation: no supply and lots of demand.
    • The roads are full of out-of-towners. We know they’re from out of town before we see the license tags. They’re the ones who are completely baffled by our basic traffic circles. (Remember, "yield" doesn’t mean "stop.")
    • The restaurants are full. Heck, I stopped at my favorite take-out place over the weekend. They told me I’d have a 50-minute wait… for take-out!

    I asked my friend, the owner of that take-out restaurant, what’s happening around here.

    "Things are definitely moving in the right direction in the economy," he said. He wasn’t willing to say that things are as strong as they were in the good ol’ days of a couple years ago. But things are better.

    I think what’s going on is that people are feeling wealthy again — wealthy enough to travel to Florida and open their wallets. And I think what’s happening in Florida is what’s happening in the rest of the country.

    I believe the U.S. Federal Reserve has tricked people into spending money again.

    By cutting interest rates to zero and printing money, the Federal Reserve has artificially pushed up home prices and other asset prices. This makes people feel wealthy. So they feel comfortable spending more money.

    The statistics prove what I’m describing. Millions of homeowners are now no longer "underwater" on their mortgages. Their homes are now worth more than their home loan. USA Today reported, "Rising home prices, up 12.1 percent in April year-over-year, have lifted 1.7 million home loan borrowers above water in the past year."

    Florida is the second-worst state (behind Nevada) for the percentage of mortgages that are "underwater." But that’s not holding Florida back today. Florida’s economy grew in 2012 by 2.4 percent — the fastest pace in six years. From my perspective here in Florida, 2013 is light-years ahead of 2012.

    For the Nation as a whole, economists are revising their growth estimates upward. Economists surveyed by the Federal Reserve (Philadelphia branch) expect U.S. inflation to run at 1.5 percent in 2013. And they expect the U.S. economy to grow in the first half of 2014 at a 2.8 percent rate.

    My painter is going to run out of cousins, and that’s a good sign for our economy.

    I believe this Federal Reserve-created boom will continue, and U.S. housing is one of my favorite ways to play it.

    Good investing,

    — Steve Sjuggerud

    Dr. Steve Sjuggerud is the founder and editor of one of the largest financial newsletters in the world, True Wealth. Since inception in 2001, True Wealth readers have made money every year with safe, contrarian investment ideas. Steve did his Ph.D. dissertation on international currencies, he's traveled to dozens of countries looking at investment ideas, and he's run mutual funds, hedge funds, and investment research departments. Steve's investment philosophy is simple: "You buy something of extraordinary value at a time when nobody else wants it. And you sell it at a time when people are willing to pay any price to get it." It's harder than it sounds, but Steve continues to be able to do just that for his readers. Click here to learn more.

    | All posts from Dr. Steve Sjuggerud

    Discuss this Story:

    Comment Policy: We encourage open discussion. Comments including racist statements, profanity, name calling or spam will be removed at our discretion. We use filters for spam protection. If your comment does not appear it is likely because it violates the policy.

    How To Run A Team Of People Who Never See Each Other
    China’s Cancelled Burma Railway Is Its Latest Derailment In Southeast Asia
    The Surprise Obamacare Ruling That Wasn’t
    In This Gaza War, The Truth Is Buried
    China’s Detour On Highway To Default
    U.S. Tortures, Poland Pays
    Another Look At Underwater Mortgages
    Ted Cruz Renders Himself Impotent
    Senate Panel To Consider ‘Too Big To Fail’ Report
    Americans Feel Increasingly Divided, Fault Obama And Congressional GOP
    You Know It’s Bad When…
    China Manufacturing PMI Explodes To 18-Month High, Employment Drops 9th Straight Month
    The Real Evil Of Monetary Central Planning
    Americans Are Living In ‘Atlas Shrugged’
    Why ‘The U.S. Should Have Already Panicked,’ The Sectarian Divide Mapped Out
    Senate Democrats Push To Triple Israel’s Iron-Dome Aid To $576 Million
    Head Doctor Fighting Africa’s “Out Of Control” Ebola Epidemic Contracts The Virus
    The Decline Of Influence
    GOP Offers Immigration Proposals, Democrats Want Money Without Policy Change
    Don’t Believe Those Lying Job Numbers
    Justice Kennedy Needs A History Lesson
    Another Day, Another IRS Revelation: Backups From The Lois Lerner Era Do Exist, Commissioner Admits
    Western Threats Mean Little To Putin
    Party Democracy Keeps U.S. Democracy Alive
    Europe Sleeps As Putin Waits
    The Fed Can’t Lower Your Grocery Bill
    Why Putin Isn’t Afraid Of Europe
    Liars, Cheats And Communists
    Eric Cantor’s Obvious Next Act
    Jobless Claims Fall To Lowest Level Since Early 2006
    Read more from Economy & Politics...

    Liberty Investor Digest

    Get today's most important
    financial headlines all in
    one place by email!



    Sources


    close[X]

    Sign Up For Liberty Investor Digest™!

    Get Liberty Investor Digest FREE By Email!

    Input your name and email address in the fields below and get today's most important financial headlines sent straight to you inbox!

    Privacy PolicyYou can opt-out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.