January 2016 – Q: What do you mean when you refer to a “new normal” in the financial markets?
A: When I use the phrase “new normal,” I’m referring to poor markets, low interest rates, and lack of growth that was previously abnormal, but has now become commonplace in our economy.
For example, sometimes I hear commentators, economists, and academics talk about how good the economy is because we are seeing, at best, 2.5% GDP growth. In reality, if we see 2.4% GDP growth by 2017, as has been predicted, we will actually be going backwards, since 2.8% growth does not even keep pace with population growth in America. This kind of low expectation thinking is the “new normal” created by the stagnation of our economy.
Hopefully, soon we will see politicians who care enough about the economy to allow seniors to earn reasonable interest on their CDs without taking great risks, and enable future generations to participate financially in the American dream.
Dan Celia has been in financial management for more than 30 years. He works closely with AFA Foundation and can be heard six days a week on AFR Talk (afr.net).
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