Welcome back, your dreams were your ticket out
Welcome back, to that same old place that you laughed about
Well the names have all changed since you hung around
But those dreams have remained and they've turned around
Who'd have thought they'd lead ya
Back here where we need ya
Yeah we tease him a lot 'cause we got him on the spot
Theme Song ‘Welcome Back Kotter’
- Congress Returns
- School Starts
- DACA Ends
- Debt Ceiling Looms
- Tax Relief Fades
- North Korea Defiance (never left)
Congress returns with a full plate that includes all the anxiety that saw it botch health care insurance that was a slam dunk. Now, the agenda is trickier in the aftermath of Hurricane Harvey and the needs of victims in Texas and Louisiana. (Plus, Hurricane Irma is looming as another potential disaster.) There is enormous pressure to pass a so-called clean debt ceiling with Harvey relief, but it may not be that simple.
Today, we are expecting to hear President Trump officially end DACA but give Congress six months to act. Silicon Valley is pounding the war drums and will spend millions trying to stop this action. Then, there is North Korea. Ambassador Haley says the Hermit Kingdom is “begging for war,” and she’s right. Add it all up, and the market will open tepidly.
Can Consumers Save Economy & Further Rally?
In June, revolving consumer debt hit $1,021,693 a new record beating the $1,020,482 reached in June 2008. This raises red flags for some but to me, it is a sign of confidence. Spending as a percentage of disposable income is far more reasonable than pre-recession levels.
The big caveat is wages which are only inching higher despite many economists saying the United States is at full employment. I continue to be confounded by the slow pace of wage growth as the paradigm seems to be new (read lower) growth after successive recessions. We must turn this around. I think it will happen. In fact, I think we could see a hockey stick formation once wages breakout to the upside.
The answer to my question is yes, consumers can reignite the economy and support the next leg higher in the stock market. The needle of growth needs help from business investment as well. Businesses have already begun to increase spending on durable goods, but I suspect they are even more eager to make those investments if given the green light from Congress.