Hope For Lower Incomed

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“In 2013, the consumer item with the fastest sales growth was private jets.  Last Year: used cars and trucks.”                                                                                                                     –Ruchir Sharma, head, Emerging Markets and Global Macro, Morgan Stanley Investment Management

The U.S. economy continues to grow at an encouraging 2.5 percent and is beginning to benefit the average consumer more than the few with top incomes.

A new world is emerging fueled by a stronger U.S. dollar internationally and lower oil prices.  Since last June the dollar has risen almost 17 percent verses the Euro and other currencies, according to Sharma, quoted above.  We’ve all experienced the drop in gasoline prices and the extra money freed.

Consumer spending grew at a pace of more than 4 percent last quarter.  The number of unemployed people for every job opening has fallen to less than two from five in 2009.  Layoffs are down, and involuntary part-time workers are moving back into full-time jobs, all of which bodes well for wage growth, Sharma predicts.

“The Employment Cost Index, which measures wages and benefits, rose by 2.3 percent in the fourth quarter of last year–a high point in the otherwise anemic recovery,”  he said.

Consumer confidence of the bottom third of income earners has surged as gas prices have dropped.  “Many more Americans have regained enough confidence in their job prospects to form households, and the number of U.S. households rose 1.4 percent last year–the highest gain since 2005,” Sharma reports.

“The shift in spending from high-end to low-end goods also picked up dramatically in the last three months of 2014.  This represents a healthy economic rebalancing toward more broad-based consumer demand.  The poor and middle class spend more of their income than the rich do. They are more powerful drivers of consumer spending,” he concludes.

These trends, which hopefully are pushing an economic rebalancing from the rich to the rest, have “strong legs,” Sharma urges.  These trends benefit Horizonte students and alumni.  Salt Lake School District’s alternative high school and adult education provider will continue to teach, graduate, and provide post high school financial assistance, for the thousands who come Horizonte’s way.

 

 

 

 

 

 

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