Lindsey Report August ’18

The kids and I have enjoyed spending time with family and friends this summer, but now the reality that school starts back within four weeks is upon them. One day, when they are in the workforce, they may look back more affectionately for their time in school!

On the economic front, the Bureau of Economic Analysis provided their “advanced estimate” for 2nd quarter GDP. They reported that the economy increased at an annual rate of 4.1% in Q2. They highlighted accelerating consumer and business spending and exports, as well as increases in government spending, as drivers behind this strong number. Moreover, they increased their Q1 growth rate to 2.2% (CNBC).

The pace of growth for the first six months was 3.1%. If the second half of the year is as good as the first, then it would be the first 3% annual growth since 2005 (Statista). Although that would be a 13-year gap, it is worth noting that the average, long-term GDP is 3.2% (Focus Economics).

As for the U.S. worker, the Labor Department reported that wages and salaries increased by 2.8% on a year-over-year basis. This represents the largest annual gain since 2008, which hopefully continues, as the U.S. consumer spending is a key component of our economy (IBT).

In addition to the GDP report, S&P 500 companies are in the midst of reporting their Q2 results. Thus far, it has been another strong earnings season. With 265 of the 500 S&P companies having reported, earnings growth is expected to increase by 22% from Q2 2017. Moreover, the majority of companies have reported both earnings and revenue above analyst expectations (Thomson Reuters). These are good indicators of a strong private sector economy.

When companies are growing their earnings, it can put them in position to, not only hire more workers, but also pay higher wages. The Labor Department reports that the private sector currently employs over 126mil workers, as compared to 109mil in 2009 (BLS.gov). If this figure continues to increase, it will hopefully be good for the economy, paychecks and the markets.

 

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.

 

Share This Post

Related Articles

Leave a Reply

© 2019 Cleat Lindsey. All rights reserved. Site Admin · Entries RSS · Comments RSS
Powered by WordPress · Designed by Theme Junkie