During the festive occasions of Christmas, there are several surefire ways to speak intelligently about the American economy that grab headlines, according to the annual guide released by Bank of America on Monday.
Key Facts
Economists at Bank of America, led by Michael Gapen, presented 10 economy-related questions likely to arise during seasonal celebrations. While they avoided any specific political discussions, they provided several confirmed facts to impress relatives at any Christmas dinner, Secret Santa exchange, or office holiday party (see the summarized questions and answers below).
How to Handle the National Debt Issue
Bank of America economists offered guidance on handling the contentious national debt issue, which has now reached $33.8 trillion, an increase estimated at about 100% over the past decade.
Among the most compelling points addressing expenditure criticisms highlighted by Bank of America is that interest expenses on federal government debt rose to $950 billion in the past 12 months, a record that represents about 3.4% of the annual U.S. GDP, while those who welcome a high deficit due to its role in supporting the at-risk economy may note that the U.S. can sustain a much higher national debt load than other countries due to the strength of the dollar.
Changes in the Economy Between Last Christmas and This Year
Bank of America economists recommend answering the question about the change in the economy between last Christmas and this year by pointing to the resilience of the U.S. in the face of rising interest rates as the economy quickly adjusts and inflation has significantly declined over the past 18 months.
A Strong Economy Despite General Discontent
Economists advise noting how prices are likely to remain high compared to what they were before the pandemic-induced inflation, causing a “price shock” to persist, and that strong broader indicators do not account for differences among industries, where much of the recent growth is focused in the tech sector.
Political Trends During the Holidays
For those brave enough to engage in more explicit political discussions during the holidays, psychologist Eileen Kennedy-Moore recommends avoiding the topic altogether if circumstances do not allow for listening and understanding. Non-partisan political observations about stock market performance during presidential years may hold wisdom. The S&P 500 has averaged an 8% return during election years since 1976, which is lower than the 11% return in other years, according to Goldman Sachs research.
Main Background
The Christmas season of 2023 is much more festive than that of 2022, as stock indices closed 2022 with their worst performance since 2008 due to the market’s assessment of the potential negative impacts associated with sharply rising interest rates. However, after the U.S. showed several months of stable unemployment, declining inflation, and rising corporate profits, opinions about the direction of the U.S. economy and stocks have turned more positive, with the Dow Jones Industrial Average hitting a record high last week as traders grew more confident that the Federal Reserve would soon cut interest rates, reducing borrowing costs for consumers, businesses, and governments and stimulating growth.
Further Reading
USA TODAY: No More Snowball Fights: How to Talk About Politics – or Not Talk – with Relatives During the Holidays
More from Forbes: S&P 500, Dow Record Longest Weekly Winning Streak since Pre-Pandemic by Derek Saul
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