The Economic Climate (9): Goldilocks climate, the perfect situation doesn't seem to last.

The perfect situation for companies and their investors is the Goldilocks climate:  not too hot and not too cold.

But whenever we get into a Goldilocks climate, it doesn't seem to last.

Most of the time, the economy is either heating up or cooling down, although the signals are so confusing that it's often hard to tell which way we're headed.

The government can't control a lot of things, especially the weather, but it has a big effect on the economic climate. 

Of all the jobs the federal government does, from fighting wars to fighting poverty, it may be that its most important job is keeping the economy from getting too hot or too cold.  It it weren't for the government, we might have had another Great Depression by now.

The Economic Climate (3): Hot, cold and warm or Goldilocks climate

In the economic climate, there are 3 basic conditions:

• hot,
• cold and
• warm.

A hot climate makes investors nervous.

A cold climate depresses them.

What they're always hoping for is the warm climate, also known as the Goldilocks climate, when everything is just right. 

But it is hard to maintain the Goldilocks climate.  Most of the time, the economy is moving toward one extreme or another:  from hot to cold and back again.