What if things don’t get better in the world? There’s a lot of bad news out there. There are several scenarios that could have a dramatic economic impact in the United States. Let’s take a look at several of these and how we believe they could impact our economy and your investments.
The economic impact of Baby Boomers and technology
The Baby Boom generation is aging which means they are not buying as much because they are not accumulating wealth. Technology is changing everything from how we do business to how products are made. These two factors combined could bring about deflation in our country.
Economic impact from Russia
Vladimir Putin may be the richest man in Russia but his country could very well go bankrupt. US sanctions against Russia, because of the situation in the Ukraine, are having a huge economic impact on Russia. As these sanctions cause their economy to slow down, we could be getting ready to see things unravel in Russia.
Economic impact from the Middle East
If ISIS continues to get out of control, the US will have to reconfigure their strategy in the Middle East. This could get more complicated. By 2021 the US will be the biggest exporter of energy in the world with Israel in second place. If Europe starts buying more of its energy from Israel, that will change the US strategy in the Middle East. This political and economic scenario will continue to change so we are watching this closely.
The economic impact on the US
It’s important for investors to remember that 90% of the internet and technology companies in the world are based in the United States. While technology may be brining prices down which could contribute to deflation, the US greatly benefits from having these companies in the country.
Because the US is leading the world in technology development and is also the largest exporter of energy, it makes us the best house in a bad neighborhood. While China on the outside appears to have a growing economy, with the population explosion and lack of jobs, they are not the power house they want everyone to believe they are. So we don’t view China as a big threat economically.
We are constantly researching and debating these potential scenarios and many others. If you have questions about this or your current investments, call me at (205) 989-3498 or email me here.
Greg Powell, CIMA
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Greg Powell is President and CEO of Fi Plan Partners, an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.