Companies, it seems, are only really, really good at making higher profits than ever. There are many reasons for higher margins. It might be progressive recent services, lower taxes, decreasing competition, consumers’ willingness to pay higher prices, etc. The bottom line is that the stock market will certainly recuperate in some unspecified time in the future (because it did this week). And there are good the explanation why corporations are price more today than they were, say, a number of years ago.
The disappearance of stagflation
In spring/summer 2022, all of the “cool” writers were predicting a scary-sounding way forward for stagflation. We, then again, were a bit more skeptical. We felt that these worst-case economic scenarios were imminent.
So two years later, should we fear an explosive increase in unemployment? Should we fear a shrinking GDP? (At least the gross domestic product.)
Barry Ritholtz doesn’t think so. He is co-founder, chairman and chief investment officer of Ritholtz Wealth Management LLC in New York City.
The chart above illustrates what economists call the “misery index.” It is a rough approximation of stagflation.
You’ll find that while 2020 and 2022 weren’t exactly great, they weren’t bad by historical standards either. Last yr was downright tame, and (spoiler alert!) 2024 is more likely to see one other not-so-miserable yr.
Please note, nevertheless, that that is American data. Canada’s misery index just isn’t quite as optimistic as within the USA, but Canada remains to be below the long-term average.
Sure, the price of living for Canadians and Americans has gone up. But so have wages. And unemployment within the US is at a 60-year low. Although growth in Canada has been “anemic,” we’ve got not experienced the deep recession that individuals have feared in recent times. Growth within the US has been excellent. And inflation has been steadily declining in each countries.
