Many Americans expect that President Donald Trump, who was a wildly successful businessman prior to winning the election, will be able to pull the U.S. economy out of its sluggish state.
Although it’s pretty early to tell, the investing guru Warren Buffett is optimistic. He has seen the economy and housing markets steadily get better.
“Homebuilding will be the best sector this year, in my view,” said Buffett.
Housing prices are up. According to the National Association of Realtors, the median price for an existing home, which is now $236,400, is up by 4%.
In terms of financing for a home, the average 30-year mortgage rate is currently 4.02%, which is still relatively low and affordable.
After Trump took office, 522,000 new jobs have been added and wages have increased by 2.5% in the past 12 months.
Then the government reported that in April the unemployment rate was the lowest it has been since May 2007. It dropped to 4.4%. The underemployment rate which includes people working part-time that want a full-time position fell to 8.8% in April, which is the lowest this percentage has been since November 2007.
Stocks are up too. The Dow is up 6% this year and the Nasdaq is up 13%. The stock market is expected to continue to climb if Trump does eventually lower corporate taxes and reduce regulations on banks.
Americans are also paying off their debt. The delinquency rate on credit cards dropped to 2.3% at the end of 2016, which is significantly less than the 6.8% in 2009. However, following the holidays, consumer spending has been stagnant the last few months.
But, the average gas price has dropped 5 cents over the past two weeks, which arguably could be a good thing in terms of consumer spending.
Although we are already seeing improvements in the economy, trade is still an area of concern.
Trump has continuously emphasized that several trade deals with other countries need to be renegotiated.
“This is perhaps the thorniest issue for Trump. He’s been hypersensitive about deals with all of America’s major partners. His pledge to “Buy American and Hire American” could put the US at odds with China, Japan, Europe, Mexico and even Canada,” writes CNN Money. “But Trump has good reason to be worried. The US trade deficit has narrowed only slightly in the past few months — and the gap has widened with China and Mexico. And the overall trade deficit is still significant — $43.7 trillion.”
Author’s note: It’s only been about 3.5 months since Trump was elected, but it’s safe to say that the future of the economy looks much more optimistic than when Obama was in office.