Buried under a difficult week of news about race and violence in this country was a big economic story. The U.S. stock market traded at historical highs, and yet as recently as two weeks ago, many market observers were warning of a recession. Here’s why this shouldn’t come as a surprise.

(Photo courtesy of Jonathan Aberman) (Photo courtesy of Jonathan Aberman)

In the land of the blind, the one-eyed man is king. Look around the world and the reality is that there simply isn’t a better place for investors right now. Thanks to former British prime minister David Cameron, the European Community will now suffer through a two-year Hamlet-like grappling by the English of how to handle Brexit. The United Kingdom’s economy is in neutral. Meanwhile, the Euro continues to operate as a fiscal hammer lock on the economies of Greece, Italy, Portugal and the other EU countries not named Germany.

China’s economy is propped up by a debt bubble exceeding $26 trillion and counting, and dwarfs in magnitude the subprime debt jamboree our economy saw in 2008.

Oil and other commodity prices are at comparatively low levels, hindering growth in places like Brazil, Russia and elsewhere. Japan is caught in a demographically driven deflationary spiral, with an aging population that — if you can believe it — saves too much.

By contrast, our economy is growing at an annual rate of 1.1 percent. Paltry yes, but there are few other places to invest right now that provide opportunities to generate positive returns. In fact, the world climate is so fraught with risk that investors are willing to lock their money in government bonds in various countries, essentially paying those places to hold their money. By some estimates, more than 40 percent of European government debt carries negative interest rates, meaning investors pay to hold that debt. Including the costs of inflation, that percentage is much higher, and includes most United States government notes. This is unprecedented in economic history.

So, why are our equity markets reaching historical highs? Difficult to imagine during this tumultuous election campaign, but the answer is political stability.
Before he left town, former House Speaker John Boehner put in place a political deal that eliminated the risk of government shutdown and budgetary brinksmanship till the end of 2016. In doing so, he helped create a period of political stability. This break from the partisan powder keg has been welcomed by financial markets.

Our nation is now being rewarded for this predictability and dependability. As our nation’s stock market attracts capital, and our bond market receives inflows, we have a tremendous economic opportunity. If there were ever a time to embrace political consistency and make investments in our nation, it is now. International investors are throwing money at us and all that they ask is that we stay stable and manage the largest economy in the world.

Yet this simple desire might go unmet. Congress has so far been able to pass the top-line budget consistent with the Boehner budget deal — notwithstanding his successor Paul Ryan’s expressed desire to have a functional budget process. The possibility that the government will require a continuing resolution to operate after September is a real one. While discussion about this resolution won’t necessarily result in a government shutdown, it is a reminder that this comparative rest may be short-lived.

Enjoy this run up in the stock market, and take it as a sign that when the United States acts sensibly and predictably, the world’s investors will provide it with ample capital to grow the jobs we need. But, if we return to the political brinksmanship that passes for governing, that capital will disappear as quickly as it has appeared.

Jonathan Aberman is a business owner, entrepreneur and founder of Tandem NSI, an Arlington-based organization that seeks to connect innovators to government agencies. He is host of “Forward Thinking Radio” on SiriusXM, a business and policy program, and lectures at the University of Maryland’s Robert H. Smith School of Business.