In reflecting on our past, we can gain insights into the present and forecasts for the future. What lessons does yesterday offer us about today? What does our current situation suggest about what lies ahead?
For instance, eleven years ago, the global economy was luxuriating in the exuberance of an extraordinary property bubble. It was a remarkable era in the United States, where optimism prevailed even during turbulent times.
During this phase, newfound wealth emerged through a captivating acronym—MEW, or mortgage equity withdrawal. Homeowners found themselves blessed with cash thanks to soaring housing prices. Mortgage brokers and real estate agents thrived, heralding what seemed to be the pinnacle of prosperity.
With a pocket full of unexpected funds, many MEW beneficiaries indulged in various expenditures. Some ventured into purchasing additional properties purely for speculative purposes, hoping to flip them for profit to others. Others adorned their homes with luxurious Italian granite, while vacation cruises became a popular way to spend those newfound riches. Continue reading
Last week, a heavy fog enveloped the area, significantly limiting visibility and making for a haunting atmosphere. The fog horns roared in the early hours of dawn as we stirred from our peaceful slumber.
In Long Beach, activity at the expansive Port of Los Angeles / Port of Long Beach complex has come to an unusual halt. Nearby, the waters between San Pedro Bay and Catalina Island teem with an array of container ships, idly drifting as they await the resolution of ongoing labor disputes.
For those who haven’t navigated through Terminal Island or crossed the Gerald Desmond and Vincent Thomas Bridges, you’re missing a truly remarkable sight. These ports are critical, handling over 40 percent of U.S. containerized imports. The endless sea of containers, cranes, semi-trucks, and railcars is a staggering sight that can’t be fully appreciated from just one viewpoint.
However, this immense operation is now experiencing significant congestion. Activities for loading and unloading ships were suspended last weekend, causing the number of ships waiting to dock to increase from 20 to 31. Continue reading
The economic landscape is always intriguing, as evidenced by the situation in China. The International Monetary Fund designates them as the world’s largest economy based on purchasing power parity.
However, the beginning of the year has revealed troubling signs. For instance, China’s exports dipped by 3.3 percent in January compared to the previous year, but the decline in imports was even more alarming, plunging by 19.9 percent.
According to Reuters, “The drop in imports is the steepest since May 2009,” when factories were still cutting inventories due to the global financial crisis. The dismal performance in trade has heightened fears that China’s economic slowdown—initially viewed as a necessary shift from an export-driven model toward one focused on domestic consumption—may be on the verge of derailing.
At Economic Prism, we weren’t aware that China’s economy was still teetering on the brink. Wasn’t there already a derailment? After consuming 6.6 gigatons of cement between 2011 and 2014, how much more can the economy endure? Continue reading
This week witnessed an unexpected development: oil prices actually rose instead of the anticipated decline.
For reasons that remain unclear, this shift was interpreted as a positive sign for the stock market. Perhaps the increase in oil prices suggests strong demand, or maybe it indicates resilient economic activity despite a fifth consecutive month of declining U.S. factory orders. Ultimately, the reasons are still debatable.
What is certain is that on Tuesday, the DOW skyrocketed by over 300 points, bringing a wave of optimism. All 30 DOW stocks concluded the day higher than they started. The following day, the DOW climbed another 211 points. Has there ever been a more exhilarating time to be involved in the market?
At Economic Prism, we suggest enjoying this upward trend while it lasts. The exhilarating rush it brings is undeniably enjoyable, but it’s essential to remember that every rise must eventually be met with a correction. That is simply the nature of economic cycles.
The economy is a complex system with numerous moving parts. Some sectors may flourish while others falter. Continue reading
