Debt service on corporate and consumer debt remains near record lows
With a slow growing economy and record low debt service demands there is a huge pent up demand for capital expenditures and borrowing.
Falling unemployment, low consumer debt obligations and eventually rising wages will allow stocks to regain their footing from any serious down market in 2014.
The aging baby boomers will keep consumption weaker than in past cycles and require more political promises of stimulus to keep voters happy.
Retiring boomers and slow economic growth is a severe headwind
But the longer it lasts the longer this poor recovery can maintain course without a recession as excessive spending and lending so typical of past economic expansions remains off on the horizon.
However even in this subdued recovery worldwide supply and demand will adjust to the new normal and allow for an end of cycle surge n capital spending in anticipation of new supplies needed to meet consumer and business demand that eventually rises above the new normal to lower extremes than the past.
Airlines, brewers, packaged food and energy have done well in this weaker retail shopping era. Technology will drive costs lower keeping inflation below past extremes. With the improved consumer, banking and business balance sheets look for money to flow toward technology applications at a faster pace than before as cars, homes and connectivity become inundated with new “apps” and functionality that add value we associate with science fiction.
Remote viewing of your property, remote interior climate control, remote electronic security changes in the home and office, music and video automation to wearable sensors, driverless cars, road sensors to communicate with users… The old technology craze of the 1990’s is shifting into the mass implementation stage competing for the excess supply of dollars held by consumers and business during this conservative demographic disinflationary retirement phase of our boom and bust cycle.