Here's how to impress relatives with thoughts on the economy this Christmas, according to Bank of America
Updated December 18, 2023, 2:43 p.m. EST
Top line
According to Bank of America's annual briefing released Monday, amid often tense discussions surrounding the holidays, there are several surefire ways to talk smart about the headline-grabbing U.S. economy.
Cheers this December.Anadolu Agency via Getty Images
Important facts
Bank of America economists led by Michael Gapen asked ten questions related to the economy that would likely come up during seasonal celebrations and, while avoiding specific political discussions, provided several facts that relatives would have at every holiday dinner to impress at any Santa Claus change or at the office Christmas party (see summarized simulated questions and answers below).
Bank of America economists offered guidance on how to deal with the contentious issue of national debt, which currently stands at $33.8 trillion, up about 100% over the last decade.
One of the most compelling points made by Bank of America for spending critics is that interest expenses on government debt rose to $950 billion in the last 12 months, a record amount equivalent to about 3.4% of the U.S.'s annual gross domestic product Those more receptive to an increased deficit because of the country's role in supporting the vulnerable economy may note that the U.S. can sustain a far higher national debt load than other nations given the dollar's strength.
Arguably the most important theme of Bank of America's launch is its response to changes between last holiday season, when a recession seemed all but certain, and this December, when the economy continues to show signs of tremendous strength.
Economists recommend answering the question of recession reversal by pointing to U.S. resilience in the face of higher interest rates, as the economy has quickly rebalanced and inflation has fallen dramatically over the past 18 months.
As for further research into why the economy is in a relatively strong position despite widespread dissatisfaction among many American consumers, the economists recommended pointing out that prices are likely to remain elevated compared to levels before the post-pandemic inflation surge, leading to further inflation The ongoing “sticker shock” and strong, broader metrics fail to account for the differences between industries, with much of the recent growth concentrated in the technology sector.
tangent
For those brave enough to engage more explicitly in political discussions during the holidays, psychologist Eileen Kennedy-Moore recommends avoiding the topic altogether if it's a situation in which “the chances of listening and being heard are limited.” will be equal to zero”. A non-political but astute observation of the stock market's historical underperformance during the presidential years might be prudent. According to Goldman Sachs research, the S&P 500 has gained an average of 8% in election years since 1976, below the 11% return in other years.
Important background
The 2023 holiday season was far more festive than 2022, as stock indices ended their worst year since 2008 as the market priced in the possible negative impact of the steep rise in interest rates. But after the US experienced several months of stable unemployment, declining inflation and rising corporate profits, sentiment about the direction of the US economy and US stocks has improved, topped by the Dow Jones Industrial Average hitting a record high last week as the Traders grew increasingly confident that the Federal Reserve will soon cut interest rates, lowering borrowing costs for consumers, businesses and governments and boosting growth.
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I'm a New Jersey-based senior reporter in our newsroom. In 2021, I graduated from Duke University, where I majored in economics and worked as a sports editor for The Chronicle, Duke's student newspaper. Send tips to [email protected].
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