What will the housing market hold for 2022? Is media hype obscuring our ability to make logical predictions? One thing that will always be a truthful and defining barometer for our markets will be the strength of the US economy. So today, let’s look at where things stand, reminding ourselves that our economy – and the work we do – mostly transcends politics and media hype. Here are some highlights that note strengths (and some weaknesses):

 

CORPORATE HEALTH

U.S. companies are recording some of their best ever financial results. Most companies’ sales are higher than where they were before Covid-19, often well above. The liquidity crunch many feared in 2020 never materialized, leaving companies with sizable cash cushions. 

  • Far fewer public companies filed for bankruptcy in 2021 than in the years before the pandemic. Big companies rebounded fastest. 
  • Large Corporations are holding record levels of cash too, almost $7 TRILLION globally! 
  • Corporate debt has swelled by $1.3 trillion since early 2020, creating an inverse risk if borrowing costs rise.

 

GROWTH

The Conference Board forecasts that 2021 US Real GDP growth will come in at 5.6% (year-over-year). Looking further ahead, they forecast that the US economy will grow by 3.5% in 2022 and 2.9% in 2023. 

  • U.S. GDP for 2021 is estimated to be around $21.5 trillion
  • In 2020 it was $20,936 trillion
  • In 2019 it was $21,433 trillion
  • In 2018 it was $20,611 trillion
  • In 2017 it was $19,542 trillion
  • Just 10 years ago it was around $15.5 trillion…..up over 38% in 10 years!

 

UNEMPLOYMENT

The number of Americans applying for unemployment benefits fell below 200,000, more evidence that the job market remains strong in the aftermath of last year’s coronavirus recession. Jobless claims dropped by 8,000 to 198,000. The 4-week average, which smooths out week-to-week volatility, fell to just above 199,000, the lowest level since October 1969. Altogether, 1.7 million Americans were collecting traditional unemployment aid the week that ended Dec. 18, lowest since March 2020 and down by 140,000 from the week before.

 

EQUITY MARKETS

All US equity markets are at or close to record highs:

  • The DOW is above $36,000 ….up almost 19%
  • The NASDAQ is above $16,000 …up about 27%
  • The S+P 500 is above $4,700 …up about 27%

 

WAGES/NET WORTH

  • US Real Median US household income was $57,732/year in 2011….in 2021 this was up to around $79,900……up about 38%. 
  • The TOP 5% of household’s average income is up around 50% in the last decade!
  • The 10 richest billionaires added $402.17 billion to their net worths in just one year, 2021. 
  • The 2021 overall median net worth of U.S. households was $121,700….a decade ago it was less than half.
  • The median balance among higher-income families (earning more than $68,896) was roughly 40% higher in September than two years earlier.
  • US household debt is over $15 trillion, mostly mortgages, about 20% higher than in 2008.

 

US NATIONAL DEBT

This is an area of concern: US debt has soared faster and further than GDP growth. Then again, COVID was somewhat akin to a world war.

  • 2017 $20,245 – Congress raised the debt ceiling
  • 2018 $21,516 – Tax cuts
  • 2019 $22,719 – Trade wars
  • 2020 $27,748 – COVID-19 & 2020 recession
  • 2021 $28,400 –  COVID-19 & American Rescue Plan Act

 

US BUDGET DEFICIT BY YEAR (past 5 years)

  • 2017 $665 billion, 3.4% debt-to-gdp ratio 
  • 2018 $779 billion, 3.8%  debt-to-gdp ratio
  • 2019 $984 billion, 4.6% debt-to-gdp ratio
  • 2020 $3,1 trillion, 14.4% debt-to-gdp ratio
  • 2021 $3 trillion, 13.2% debt-to-gdp ratio, high, yet half of what it was during WW2.

 

GROWING COMPANIES

  • In 2017 Tesla produced 103,000 vehicles. In 2021 – 5 years later – it delivered 936,172 cars!
  • In 2017 Amazon sold $177 billion. In 2021 estimates are around $550 billion…..more than TRIPLE!
  • In 2017 APPLE’s revenue was $ 229 billion ….5 years later in 2021 it’s up to $365 billion….up almost 60%!
  • In 2017 COMPASS sales volume was around $31 BILLION……by 2018 it had grown to $45.5 billion, up around 46%.  A year later in 2019 sales volume hit $97.5 billion up over 100% and in 2020 $151.7 billion…up 55%.

 

The US economy is not a reflection of the handful of politicians, media types or loudmouths that steal headlines daily. No individual, media entity or political party drives the US economy. The PRACTICAL, hard-working PEOPLE of the US that help drive this economy daily – YOU! – are the stars. Don’t forget it and I hope knowing this starts your year off on a good note.

The Dinsmore Group would like to give content and writing credit to Leonard Steinberg @theleonardsteinbergteam. He shares his valuable insights through his wonderful COMPASS wide journal, COMPASS Contemplations. Mr. Steinberg holds the esteemed title of Chief Evangelist at COMPASS.