WealthTrust-Arizona Examines Key Factors to Watch Out For As The Economy Improves

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Financial Expert From WealthTrust-Arizona Reviews Key Factors That Could Potentially Affect Our Economy In The Coming Months


Despite the naysayers, the economy is improving, as debt is down, confidence is up and the unemployment rate gets better. No matter how much better things are now, not even the most optimistic politician, economist or analyst can credibly say our nation is out of the woods yet. While predicting the future is always a rocky proposition, Mike Bowen, Vice President and Senior Financial Advisor with WealthTrust-Arizona, assesses a few factors to help determine how the next few months could play out.

Rising Prices at the Pump
It may seem counterintuitive, but the per-gallon price of gas continues to rise, with some parts of the country seeing average prices at more than four dollars a gallon. Why is that counterintuitive? Because (again, despite what some are loudly saying) the output of U.S. refineries has hit all-time highs, and the rate of American gasoline consumption is the lowest it has been in more than 10 years. For the first time in more than 60 years, our country is actually exporting more gas than we import.

Given all that, why are we bracing for even higher gas prices as we get ready to enter the summer driving season? “There is oil speculation that is partly driven by forces outside our control in the Middle East,” explains Bowen. “While the United States has been pushing for Iran’s largest oil customers to embargo Iranian oil in protest over their nuclear program, the Iranians have made threats that they would close the Strait of Hormuz, the world’s most significant oil passageway. Even if they don’t follow through with the threats, that kind of global brinksmanship is enough to push the price of oil even higher.”

The European Problem
These days, all eyes are on Europe, as the rest of the world waits to see how Greece and other nations on the continent deal with their impending debt crisis. The United States is a major exporter of goods to Europe – more than 250 billion dollars each year – and a deep European recession could dramatically affect that number. “This would affect exports and manufacturing, a key part of the U.S. recovery,” according to Bowen. “If we find that our nation’s banks are more exposed to European assets than we had been led to believe, they might cut back on growth, which would negate some of the progress we have seen.”

The Political World
Last year, the U.S. lost its top-tier AAA credit rating after more than 70 years. At the time, Standard & Poor’s said, “The effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenge.” This was shortly after Congress came uncomfortably close to allowing the U.S. to default on our nation’s debt obligation. “While we dodged a bullet in this case, the next time, we may not be so lucky,” according to Bowen.

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Iliana Bulnes
PRfect Media International, Inc.
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