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Answer:
Dear
Vicki,
Well,
we might be. But first let's discuss what the phrase
"goldilocks economy" implies for those who might not
know.
Goldilocks
economy defined
Apparently,
this term was first used to describe the economy (the
U.S. economy, that is) during the mid- and late-1990s.
At that time, the economy was regarded by many experts
as being right on target -- "not too hot, not too
cold, but just right."
During
that goldilocks period, the Federal Reserve Board
rarely took measures to change things. There was no
need to do so.
Today's
picture
The
situation today is not quite the same. In fact, as
you know, the Federal Reserve Board has indeed been
taking measures -- raising interest rates -- to keep
a lid on inflation.
The
concern associated with increasing rates is that it's
easy to increase them too much, too quickly and thus
undercut economic growth.
Fortunately,
the Fed seems to be calling it right as our economic
outlook is much more positive than it was a while
ago.
Here
are leading May figures, announced in late June:
-
Factory orders: Up
2.9%
-
New jobs:
194,000 new jobs were added, following the 78,000
new jobs added in May
- Retail
sales:
June's growth was the strongest since March 2004.
Sales were up across the board -- discounters, wholesalers
and clothing retailers
-
Durable goods: Orders for items expected
to last at least three years were up 5.5%, over
1.5% in April
- Nondurable
goods: up
0.1% after a decline in April, also of 0.1%
-
Manufacturing: Has
had an uninterrupted expansion since June 2004
These
figures certainly indicate a positive outlook. Will
the trend continue and turn into a goldilocks economy?
I hope so, but I don't know so.
Bottom
Line
These
numbers can help you evaluate your personal portfolio
and determine what industries and what stocks you
wish to hold.
Keep
in mind that demand for airplanes, household appliances
and furniture was up while demand for cars and steel
was flat and sales of computers and machinery actually
fell.
And,
don't forget to diversify -- a portion of your money
should be in income-producing assets, such as U.S.
Treasuries, corporate and municipal bonds and bank
CDs.
About
Goldilocks
In
this 1830s English fairy tale, a little girl with
golden hair wanders into the home of three bears while
they are out for a walk in the woods. She tastes their
porridge, finding Papa Bear's too hot, Mama Bear's
too cold but Baby Bear's, "not too hot, not too cold
but just right."
I
leave the moral of the story to you!
The
most famous version of Goldilocks was written by Robert
Southey, a young Oxford grad. He said the university
was, "a place where all I learnt was a little swimming...and
a little boating." Nevertheless, he floated on to
become England's poet laureate and the author of "After
Blenheim," one of the earliest anti-war poems.
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