Economic check-in: Goldilocks environment

An improving job market, low inflation, and a strengthening dollar all add up to a more-confident U.S. consumer. But is consumer spending sustainable? And will turmoil overseas help or hurt the ongoing U.S. expansion?

“Overall, it’s a continuation of the Goldilocks environment, where you have low inflation, low interest rates, and an expanding U.S. economy.” - By Lisa Emsbo-Mattingly, Director of Asset Allocation Research, Fidelity

Below summary by Anthony O'Brien

An improving job market, low inflation, and a strengthening dollar all add up to a more-confident U.S. consumer.

But is consumer spending sustainable? And will turmoil overseas help or hurt the ongoing U.S. expansion?

Where are we in the business cycle?

Emsbo-Mattingly encourages investors to look less at the length of the recovery and more at the current state of play to determine where the US is in the cycle.

Wage increases driven by a strengthening global economy typically signal progression to the later stages of the business cycle. There is very little evidence that this is happening.

What does a stronger US dollar mean?

It will create some tough times for manufacturers, but exports contribute only a small percentage of U.S. GDP. So, the negative repercussions from decreasing trade competitiveness are not as important as they would be for countries that rely more on exports.

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