Lindsey Report May ’19

In the first four months of 2019, equities (as measured by the S&P 500) had their best start to the year in over 30 years.  Since 1980, when the S&P 500 is up more than 10% in the January-April period, the markets have seen positive full-year returns 8-of-9 times (CNBC).  The lone time this did not happen was 1987, and I’d rather not relive “Black Monday”.  I’m pulling for 9-of-10!

Towards the end of 2018 and certainly to start this year, there was much concern about a significant slowdown in the U.S, especially in the first quarter.  While there were a handful of optimistic views, most of the reports I either heard or read suggested that the U.S. economy would barely grow in the first quarter.  I certainly heard many suggest a growth rate below 1%.

Well, to the pleasant surprise of many, the U.S. economy grew at an annual pace of 3.2% in Q1.  This topped the highest Bloomberg consensus estimate for growth.  Moreover, it was the best first-quarter-gain since 2000 (LPL Daily Market Research, Friday, April 26, 2019).

There were other positive economic developments overseas.  The European Union reported that growth had increased in Q1 at an annualized rate of 1.6%.  While that is a fairly tepid pace compared to us, it is double the .8% pace at the end of 2018.  Some countries like Germany very narrowly avoided a recession in ’18, so this was a positive turn (CNN).

A similar story occurred in China, where their economy grew faster than expected in the first quarter.  Some view the better-than-expected results in the U.S., EU and China as an indication that global growth may accelerate, and that 2019 may not be as “gloomy as expected” (CNN).

Returning to domestic news, on Friday, 5/3, The Labor Department reported that the U.S. added a robust 263,000 jobs in April (NBC).  Worth noting, unemployment among women fell to 3.1% – the lowest rate since 1953, and the rate for Hispanics fell to 4.2% – the lowest rate since they began tracking in 1973 (BLS).

In another good sign, especially for workers, average hourly earnings rose to $26.74.  Year-over-year, they have had their highest rate of growth since 2009 (Bureau of Labor Statistics).

 

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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