This Isn’t Your Daddy’s America

Andy Snyder|March 5, 2020

When you’re done reading this, you’ll know something that 99.99% of Americans don’t know.

Put the pieces of this puzzle together correctly and you’ll not only understand what’s driving this mad economy… but also know the very best way to take advantage of it.

But before we get to it, we must start with a question.

When was the last time the American economy went in reverse? In other words, when was the last time quarterly GDP growth was negative?

It’s a tough one.

Few folks we’ve talked to this week know the answer.

There’s been a lot of scary stuff in the news over the last few years. Trade spats, government shutdowns, war drums, terror attacks, yield curve inversions… you name it.

But none of that was able to threaten what has now become the longest expansion in the nation’s history.

In fact, here’s the answer to that question. The last time the economy slipped backward over a three-month period was in 2014, when the nation was in a panic over the threat of a “polar vortex.”

Airlines canceled some 20,000 flights.

Schools closed.

Businesses shut their doors.

And energy prices soared as furnaces desperately tried to keep ahead of the arctic air.

Compared with all the things that can take down the world’s strongest economy… a cold front seems like a silly foe.

It’s a sign of a different kind of economy.

From Boom to Bust

Just in case you haven’t noticed… this isn’t your daddy’s America.

This chart proves the point.

The news depicted in this image is both good and bad. It shows that the nation’s GDP growth has become quite steady over the last few years – with fewer swings to the upside or downside.

Large jumps between growth and contraction are now a thing of the past.

These days, growth is slow but reliable. Gone are the quick-moving busts… but gone, too, are the booms.

Lots of folks say we have the monetary maestros in Washington to thank (or blame).

But we don’t buy it.

Instead, we blame something a whole lot more troubling. It’s perhaps the nastiest evolution of our economy.

We’ve dealt with it over the past 18 months. And, more acutely, it’s caused panic over the last two weeks.

It’s the reason a strong cold front can send our economy into a tailspin. And it’s the reason a single virus can make it impossible for Americans to get their drugs… a new phone… or even parts for their car.

Few things are made in America these days.

Help Wanted: Pipe Fitters Yoga Instructors

The chart above perfectly shows the transition from a manufacturing economy to a service economy.

When America made things, the economy was much more cyclical. Steel mills would get busy and then slow down. Car buyers would load up… and then disappear for a few years.

Sick of the expense of it all, we pushed those industries onto the backs of somebody else.

It felt like the right thing to do.

These days, we import all of our goods and make our economy buying, selling and servicing all that stuff.

It’s never been easier to get rich and make nothing.

Sitting at the beach all summer has never been more popular… or possible.

Mechanics, accountants and yoga instructors are in high demand… but none of them make anything more than an invoice.

It’s why a polar vortex can send us backward and why a silly virus requires a massive emergency effort by the folks in charge of our money.

And it’s also why our economic enemies are gaining more and more leverage with each passing day.

It begs a question we’ve been asking for a while now.

What does the next recession – or nasty cold front – look like?

Can the boys in Washington prevent a calamity in an economy that depends more on yoga instructors and on-demand video subscriptions than factory output and making new things?

So far, the answer is no.

The Fed swooped in this week and cut rates again. But it knows it can’t stimulate the economy with this move… It can only stimulate the stock market.

It can only force money out of bonds and into stocks.

That’s scary.

It means we’re on borrowed time.

The history books will now show slowdowns for the weather… for the sniffles… and, dare we say it, for shark attacks at the beach.

Again, this ain’t your daddy’s economy.

Our advice for it all?

Invest like there’s no tomorrow.

Take advantage of the action while you can. (And use trailing stops!)

Buy stocks while the Fed can still prop them up. It’s created one of the greatest bull markets we’ve ever seen.

Like free coffee in the hotel lobby… you’re crazy not to fill up your thermos while you can.

You never know when the next cold front will come roaring into town.