Lindsey Report October 2018

Although there are continued political and tariff concerns, the S&P 500 and Nasdaq both hit multiple new all-time-highs in August. The Dow Jones Average followed suit, hitting an all-time-high in late September (AP).

While the aforementioned concerns exist, the domestic equity markets seem more focused on positive economic news. Some things have been well publicized like the U.S. economy exceeding 4% GDP in the 2nd quarter (Rueters), and hopefully this continues. Kiplinger estimates that growth will be solid 3.3% in the 2nd half of the year. They note, “Tax cuts are boosting GDP through rising consumer spending and stronger business investment” (Kiplinger).

Regarding the consumer, on Sept 25, The Conference Board reported their monthly Consumer Confidence Index. They noted, “…confidence increased further in September and hovers at an 18-year high”. They highlighted a “strong economy” and “robust job growth”, as contributing factors (conferene-board.org).

Job growth has continued to tighten the labor markets. The official U.S. unemployment rate sits at 3.9%, near the 18-year low. The real concern now is finding qualified applicants, as there are more job openings than there are people claiming to be unemployed (Trading Economics).

Many of the jobs being created come from small business. The U.S. Small Business Administration (SBA) reports that there are approximately 30.2 million small businesses in the U.S., and they employ 47.5% of ALL private sector employees (sba.org).

The National Federation of Independent Business (NFIB) conducts a monthly “optimism” survey of small businesses. Here was there August headline: “Small Business Optimism Shatters Record Previously Set 35 Years Ago”. They suggest this optimism will translate into job creation, expansion and capital spending. However, a record 25% of owners cited difficulty of finding qualified workers as their “Single Most Important Business Problem” (NFIB).

 

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

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