We just finished a fantastic long weekend at our Florida place enjoying all of the America 250 festivities.
The celebrations & fireworks at Walt Disney World – and our own small-town Independence Day parade (no politicians!) were terrific. Seeing the tall ships in NYC, the time capsule in Philadelphia, and midnight fireworks in Washington DV were also highlights. We visited all of those places this year.
We’re heading back to MN today and I thought I’d take the time to get serious and analyze where we sit in the financial markets / economy at the midpoint of our country’s 250th Anniversary year.
To start with, the economy is in much better shape now than the 1976 Bicentennial 50 years ago. Inflation was 5.4%, unemployment was 7.7%, and 30 year fixed mortgage rates were 8.9%. All of these key measures are much lower for the Semiquincentennial (4.2%, 4.2%, 6.3%) – although it would be nice to get all of them a point or two lower.
On the investment side, the stock market is having a surprisingly solid year. The S&P 500 is up 8%, international up 8%, and high-dividend stocks up +8% (plus 4-5% in dividends). AI, chip, and energy stocks seem to be the key drivers of the overall market, although the vaunted “Magnificent 7” are down -0.4% in 2026 YTD.
Bonds continue to struggle. The benchmark VBMFX fund is -1%. Other than the pandemic, bonds have basically been sliding for 10 years. The dollar is slightly stronger in the last 6 months against the Euro, Pound, Yuan, and Canadian $.
Housing continues to be a struggle for investors as prices are falling from pandemic highs and interest rates are going a little sideways right now. The challenges are compounded with medium-high interest rates – making this the best buyers market since 2009.
All-in-all, I don’t think the economy / investing is bad right now, but it could be better. Trump promised to right the ship after the dreadful Biden years, but he’s made detrimental economic decisions on tariffs & the Iran war that have set us all back.
Still, I don’t see the need to change course on anything in our retirement portfolio. We’re full-steam ahead.
Hopefully, the powers in government & industry will find a route toward more economic stability that will help close out the year with some improving trends. Lower inflation should lead the way – especially if ships navigate the Strait again and Trump’s tariff proclivities continue to get reined in by the courts.
How do you see the economy / investment opportunities right now?
Image: Pixabay
MrFireStation 
YTD, electric utilities that provide power to AI datacenters and reshoring of manufacturing have done well. My oil and gas holdings did well too.
Screening today, I am seeing IT consulting companies, HR services providers and junk food companies. These are likely an overreaction to AI.
One area where I think the economy was better in 1976 was for young people starting out. I graduated high school in 1977 and started working at Tommy Barlett’s Water Ski Show selling tickets, vending beer and cleaning the site. I cleared $2,250 during the summer and was able to pay for my UW Tuition, room and board, and books were loaned so you didn’t have to buy them for $1,650 for the entire year. Entry level jobs paid enough for young people to be out on their own.
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Much of one’s view of the economy in 1976 was dependent on where you were geographically. The Northeast suffered from aging industry moving away such as Buffalo and textiles in northern Massachusetts. Those areas were particularly hit with unemployment higher than the national average. I recall relatives in their old age (not much older than I am now) struggling with increased property taxes in Massachusetts.
Today the economy is good but industry by industry is in transition. It is better than the media portrays as the industries suffering from layoffs are traditional media and higher education. The media loves to look at highly educated people as the voices to be heard which today is a joke. Leaders in higher education seldom support change and cling to job protections such as tenure and such jobs have been artificially supported by government (grants, student loans and foreign students) for far too long.
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I spoke with a neighbor yesterday who cannot find a gig in the film and television production industry in Southern CA for the first time in 30 years. They would have to move away. And yet, Taylor Sheridan is producing hit after hit in Texas. I read that he has built 400,000 square feet of production studios and no way is he coming back to LA.
Out of the nine houses in my neighborhood that burned, I see actual work has begun on only one. The foundation, block walls and roof tresses survived. The owner, who is an architect is rebuilding the exact same house with fire resistant upgrades of course and it took 18 months to get permits. The same type of governmental foolishness is chasing the entertainment industry out of town.
The Howard Jarvis Taxpayers Association got a Proposition to shore up Proposition 13 on this November’s ballot. Retirees were losing their mortgage free houses in California in 1976 because they couldn’t afford the property taxes. Proposition 13 was passed in 1978 to limit the tax to 1% and capped the maximum annual increase to 2%. I think this latest Proposition is designed to stop the Proposition 13 cheating that local communities have been doing by taking on parcel fees for things such as Santa Monica Community College. I am getting a mailer to learn more about it in my mail today.
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