Fellow Fool Morgan Housel recently reminded us how awesome America was in 1995. In particular, he cited President Clinton's State of the Union address from 1995 to drive home that point. Clinton said, in part: "We have the lowest combined rates of unemployment and inflation in 27 years."
In Clinton's eyes, that was a solid marker of a thriving economy. Morgan wouldn't have quoted this bit unless he agreed. He was, after all, driving toward the conclusion that 1995 "sounds wonderful" in this perspective.
I can't match Morgan's exhaustive rundown of how 2013 mirrors or beats the old go-go economy days on many levels. Drop back to his story to revel in just how amazing the modern American life really is. I'll wait for you right here.
I can, however, fill in one of his big blanks. The combined rate of unemployment and inflation, which was such an important metric for Clinton, is doing just fine nowadays:
Data taken from the U.S. Department of Labor, using the series for seasonally adjusted unemployment rate and annual consumer price index inflation.
These two metrics added up to 8.2 at the end of 1994, just before Clinton made his address. Today, the same sum stands at 8.3 -- a rounding error away from matching Clinton's declaration of historically low economy drags.
The mix is a bit different this time, for sure. Inflation is amazingly low in exchange for a higher unemployment rate. But in general, America is humming along at historically very acceptable levels and the unemployment trend is pointing to even better days ahead.
The Dow Jones Industrial Average (^DJI 0.40%) has more than tripled since Clinton made that speech. Skeptics would have you believe that we're overdue for another drastic correction, simply to account for the shaky economy under our feet. I'd advise you to take another look at the unemployment-plus-inflation history and then dive back into Morgan's perspective-setting story.
Everything is amazing and nobody's happy, indeed. And if we are headed for another correction, it'll be old hat and irrelevant to truly long-term investors just a few years down the road. Patience is a virtue, and so is optimism.
