Friday , 1 August 2014
Breaking News

The economy can be like rollercoaster ride

In our consumer-based economy, when shoppers feel like spending, business gets a boost. But when they worry about rising prices and stagnant salaries, business usually slows down. And as is usually the case, Wall Street reacts accordingly.

Brickell investor Herman Valerius is happy that Wall Street has been setting new records recently. But he also hasn’t seen many improvements in his own bottom line.

“Honestly, I think there are few people who have seen any impact from Wall Street,” he said. “I am still nervous about what might happen in the next six months to a year.”

As it turns out, he is not alone.

Despite the better-than-expected firstquarter spending, consumers still are being hit with stagnant salaries, rising energy costs and a tight job market. Mid-March consumer confidence fell more than expected nationally, to its lowest levels in two years. That is one reason why we saw a small pullback a few weeks ago, cutting short Wall Street’s best rally in 16 years.

Some financial planners say now is a good time for small investors to double check their long-term strategies.

“Normally when markets are doing well, I like to see people taking profits, and conversely, when markets are down, putting some money into stocks,” Lane Jones, from Coral Gables financial planners Evensky & Katz, explains. “But if you’ve been hunkered down and haven’t been in the stock market because you’ve just been fearful and earning next to nothing in yields from savings accounts, it’s a great time to rethink getting back into a long-term strategy.”

Here’s the good news: Locally, tourism around South Florida is out-pacing last year’s record levels. New residential and commercial construction projects are starting to pop up. Local real estate values are growing. And our 401Ks and other retirement accounts should be showing solid gains since the end of last year.

So will the second financial quarter see more gains or more consumer pull-backs as we approach the second half of the year? Will hiring finally get back to pre-recession levels and will big business start adding new jobs to replace all the ones they’ve cut the past five years?

Lots of questions remain and that is why so many consumers and investors are still worried about the pace of our economic recovery here and across the country.

As we stay in the TV business: Stay tuned!

Watch Al Sunshine’s “4 Money Watch” reports Monday-Friday. You may find Al’s blog at www.cbsmiami.com.