They don’t care if they can get long-term mortgages at record-low interest rates. A household’s net worth can’t increase if a family doesn’t invest in assets that can rise in value.
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New York, NY (PRWEB) December 14, 2011
According to Michael Lombardi, lead contributor to Profit Confidential, it looks like what American consumers are saying about the U.S. economy, through their actions, may actually be right. As reported in Profit Confidential, it’s been four years now that Americans have been paying down their debt instead and increasing their savings. They are not buying homes and they seem to have given up on the stock market.
A recent report from the Federal Reserve stated that the net worth of households has dropped for the past two straight quarters. According to Michael Lombardi, lead contributor to Profit Confidential, this is an alarming development.
Profit Confidential has investigated the trillions of dollars that the government has thrown at efforts to save the economy.
Despite all the good intentions of the government and a favorable interest rate environment in which to make investments, Lombardi goes on to say, household wealth in the U.S. continues to deteriorate.
Consumers have been on an asset-purchasing strike for three years now, says Lombardi. “They don’t care if they can get long-term mortgages at record-low interest rates. A household’s net worth can’t increase if a family doesn’t invest in assets that can rise in value.”
Although in the past, Lombardi has said that the majority is often mistaken, this time he believes that perhaps the American consumer is not wrong. Interest rates are destined to rise. “We all know investment real estate prices fall when interest rates rise. And why buy stocks? Investors have been burned so many times before in stock booms that went bust. And won’t the stock market fall when interest rates eventually rise?” asks Lombardi.
The American consumer accounts for 70% of U.S. GDP. Lombardi believes that consumers are de-leveraging and increasing their savings despite record-low interest rates. “It will take years for this current consumer psychology to change and hence years for true economic growth to return to America.”
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.