The data can seem overwhelming, and we have written about the global chaos which can threaten markets. But the argument in favor of continued economic health and US stock market gains is a compelling one.
Market growth has been aided by the strengthening of monetary policy and improved tax policy, which has in turn sparked growth in US businesses and GDP. Flattening tax rates and raising interest rates have freed up business decisions on hiring and payroll – making the free market “freer” again. Congress remains a wild card, and fiscal policy has been debt riddled for over a decade. But getting 2 of the 3 big ticket policies RIGHT has taken an economy propped up by government money printing and instead allowed free market decisions to drive up profits and stocks.
Here are the top 5 reasons this market should remain bullish for a while:
- “Analysts see +4% growth in second quarter GDP”: First quarter numbers were only 2% after a strong 2016. However, first quarter’s usually see a post-Christmas slump. The personal income and household wealth numbers from April, combined with May preliminary numbers, suggest a 3rd quarter growth rate sizzling at above 4%!
- “Earnings have been impressive and robust”: Chipotle, yes, Chipotle – earnings up 36% in April ….. Amazon up triple per share compared to analysts estimates…..Apple up, Netflix up….there is no escaping that as earnings go up, stocks go up, portfolios go up, people spend more……you get the trend, and the trends are your friend.
- “Record-low unemployment”: The unemployment numbers reached their nadir in November 2009 at 10.1%, and steadily improved since that time. But still – high 4, close to 5% unemployment seemed to be the fixed rate …. until now. Unemployment has dropped below 4% for the first time since 2000. Improved tax and monetary policy have unleashed free market incentives and business expansion …. even the more accurate labor participation rate has improved …. minority employment is the best in forever. No doubt, the economy is showing its strength in numbers.
- “Household income is up from pre-recession levels”: The 2018 first quarter Federal Reserve report indicated homes with a family of four are now earning 61K a year on average, higher than the 2007 numbers which were 57K a year …… personal income is up, as is household net worth. Total household net worth is at 100 trillion at the end of the first quarter, highest ever on record, and 7 times higher than disposable income. And those averages come with improved income distribution, as both low income and middle-income households gained the majority share of increases in net worth, with the smallest gains going to the top 1%.
- “All job sectors have seen increased wage growth”: Information technology jobs are paying $39.40 an hour….Financial services are up to $34.77 an hour ….. Transport and utilities are up to $24 per hour ….. Education and health care are up to $26.90 per hour ….. Business services are up to $32.18 per hour …. across ALL sectors, wages are going UP!
Lots of reasons to focus on the positive data points in the economy. Regardless of the unprecedented run up in GDP and the stock market, the prudent investor looks for principal protection products – where you can participate in market gains, but have none of the losses when e inevitable downturn occurs. Call now for to learn about the only three ways to keep your money protected! 877-912-1919