Welcome to week three of the Husky Investment Tournament!
The third round of stimulus checks were just approved this past week. The bill came out to a total of $1.9 trillion dollars. Some of you may question why the government is willingly giving us cash. The reason is purely economic. The point of the checks is to have citizens spend the money when it is received and “stimulate” the economy. An issue that has come up with these checks is that many Americans are taking their checks and putting the money aside. This action defeats the purpose of the “stimulus” checks. Hopefully, enough Americans spend their checks and the economy sees an increase in activity. The stock market should mirror the increase.
Better economy = higher stock prices = lower unemployment = economic recovery from the pandemic
It is good in theory, but it will be interesting to see how the economy reacts going forward. Many of the major stock market indexes are reaching all-time highs and hope is on the horizon for all Americans. However, is the economy really in a better place than before COVID-19? Or is our economy artificially propped up from three rounds of stimulus, and near-zero percent interest rates?
For this week’s video, Laura Connolly, an assistant professor of economics at Michigan Tech, discusses economic indicators and how investors can use them to gauge their investment decisions. Please note, the rates and indicators in this video are from October 2019; however, the information surrounding how to read and interpret these ratios is relevant.