The Race Continues: Economic Growth vs. An Economic Tantrum – Week 3

Leading Indicator Flashing Yellow:

In graduate school I learned that auto sales and home sales were two very good leading indicators of the American economy. Therefore, I have paid particular attention to the last several months of reported auto sales, both new and used. They clearly indicate a slow-down in the auto industry. It appears that the peak of auto sales was last year and while 2017 will be a “good” year by historical standards it will be softer than 2016.

Our analysis is that the economy in this economic cycle peaked in 2014. So we are not surprised by the slow-down in auto sales as much as we are of the delay in it happening.

In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is land.