Aggregate demand, economy trending upward

By |  October 10, 2018
U.S. Aggregate Demand Source: S-C Market Analytics

Source: S-C Market Analytics

Energy and manufacturing will be the two drivers of the U.S. economy during the next two years.

These two sectors have not been the leaders for many years. The U.S. is now the world’s leading oil producer and is rapidly regaining its position as the leading manufacturing nation.

Many factors have produced this, but the most important is a change in policies from Washington. It reminds me of President John F. Kennedy’s support of the Apollo space program – most thought it couldn’t be done.

Source: S-C Market Analytics

Source: S-C Market Analytics

Because of these policy changes, the U.S. is back in the game of business.Other countries will react and, going forward, a fight for dominance will keep everyone working hard, both here and overseas.

The beneficiary of all of this will be the consumer, who will get great products from many places. As an aside, the trade skirmish will not turn into a long trade war. We will move closer to a tariff-free world by 2020.

As a result of a rapidly growing U.S. economy, construction activity will remain strong with nonbuilding construction leading the way.

The private segments, both residential and nonresidential, will grow a little but these interest rate-sensitive segments will have to deal with higher financing costs, which is the price of a rapidly growing economy.

With state and local governments in better budget positions, nonbuilding will be the plow horse, pulling aggregate demand upward for the next two to five years.

Regionally, most of the Sun Belt and the Rust Belt states will do well. States that will lag behind are the farm states, high tax states and states with large unfunded pension liabilities.

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