Welcome to 2014, the year that we officially see the economy turn around and start to grow again! There are many signs that signify a healthy economy and we are currently seeing most of them on the mend. Consider that the stock market is near an all time high, and that’s despite the fact that interest rates are going up. Yes, that is another indicator, interest rates on investment and mortgages alike are starting to steadily rise month over month. Then we have the housing market, which is seeing new construction rise steadily, as well as the number of existing homes sold up two fold over previous years. One of the last and more significant indicators of a strengthening economy is that of jobs growth. When jobs are on the rise you have more people working and business owners investing, that’s the cycle of spending that we all learn about in our economics class.
Interest rates are a tricky indicator, when they are low then people love to invest in the stock market and stock options because the rate on reliable treasury bonds is are so low. At the same time, they spur the housing market because more people are willing to borrow at lower interest rates. Yet, when rates rise we consider the economy to be stronger because it means that people are still willing to invest and borrow despite rates increasing.
All of the indicators above lead right into job growth! For people to invest in the stock market, build and buy houses, and to spend money in general then they need to be earning money! It’s clear that corporations and small businesses alike are feeling confident in the economy and are willing to invest in hiring more people. The number of jobs isn’t the only sign this is true as compensation and benefits are on the rise again as well. Consider that the average salaries are increasing, 401k matches and pensions are becoming more generous, and healthcare benefits are growing stronger.
With the signs of an improved economy we are seeing consumer confidence growing along with it. The recession has been dragging us down for over half a decade so these improvements are a welcome sign and long overdue. I personally hope that we continue to see the economy rebound even further.