The U.S. Economy Continues to Grow
The U.S. economy grew by an annualized rate of 2.1% in Q2 of 2019, which beat somewhat pessimistic expectations of 1.8%.Household consumption and government spending increased at faster rates, while a slump in exports and a smaller inventory build made a negative contribution to growth. Remember though, GDP is a backward-looking metric, and should be used only as part of a much larger investment research “bag of tools,” when measuring the health of capital markets.
What did the media do with the above information, here's a glimpse of headlines: "Economy misses Trumps target," "US economy slows...," "GDP growth slows to 2.1%..." you see where they're taking this. Let us help separate the news from the noise.
We expect many in the media to continue to find reasons (from valid, to partial truths, to made up) to say that “this is the end,” and it will likely come from the same people that called for The Q1 2019 Bear Market Recession That Never Came. Just doing a Google News Search for “Recession 2019” returns “about 32,800,000 results.” But where is it? (Remember, even a broken clock is right twice a day.) The S&P 500 is up almost 20% as of this writing, has hit several new all-time highs, which if you consider that the stock market is a great forward-looking indicator on the US economy, the next 12+ months look to have this plow horse economy continue growing, and along with it, capital markets.
We believe equity investors should have long investment horizons (ten years or more) and, therefore, shouldn’t obsess over daily moves (or even quarterly or annual changes) in stock markets. That’s true whether you are looking at points or percentages. We realize it’s easy to get distracted by market fluctuations that create wider than usual swings in the balance on your account statements. This can make it more challenging to stay the course and remain focused on long-term investment goals. That’s why we recommend consulting with your financial advisor, who can help you identify your goals and risk appetite and develop a long-term plan to help you reach them. If you ever need a second opinion, please don’t hesitate to contact us.