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In today's rapidly changing financial landscape, staying informed is more crucial than ever. John’s latest economic update dives into the key trends and insights shaping the markets in the 3rd quarter of 2024. Whether you're a seasoned investor, business owner or just curious about the economy's direction, this analysis provides the essential information to keep you ahead of the curve.
In today's rapidly changing financial landscape, staying informed is more crucial than ever. John’s latest economic update dives into the key trends and insights shaping the markets in the 2nd quarter of 2024. Whether you're a seasoned investor, business owner or just curious about the economy's direction, this analysis provides the essential information to keep you ahead of the curve.
Well, 2018’s third quarter earnings season is history. It was pretty much a repeat of both the first and second quarters. The U.S. economy will stay strong in 2019 and inflation will tick-up above 2% and so the U.S. central bank should continue to raise interest rates gradually, New York Fed President John Williams said Tuesday. “Given this outlook of strong growth, strong labor market and inflation near our goal and taking account all the various risks around the outlook, I do expect further gradual increases in interest rates will best sponsor a sustained economic expansion,” Williams said at a press briefing.
It can’t get a whole lot better in the U.S. job market (or can it?). The employment situation continues blast through expectations. The number of Americans losing their jobs and applying for unemployment benefits each week remained near a 49-year low in mid-October, suggesting no visible deterioration in the U.S. labor market.
Initial jobless claims, on measure of layoffs, dropped by 5,000 to 210,000 in the seven days ended Oct. 13th. While new jobless claims edged up by 2,000 to 211,750, they have been below 220,00 since early July, a remarkable stretch last duplicated almost a half-century ago. The number of people collecting unemployment benefits, meanwhile, fell by 13,000 to 1.64 million. These “continuing” claims touched the lowest level since Aug 1973.
Additionally, Job Openings just hit a record high and the U.S. Unemployment rate has fallen to a 48-year low while hiring remains robust. The demand for labor is so strong it’s pushing up the cost of worker compensation and giving an economic growth cycle that’s now more than nine years old the staying power to become the longest expansion ever.
The 2nd quarter increase in real GDP reflected increases in consumer spending, exports, business investment, and government spending. The only decreases were in business inventory investment and housing investment. The increase in consumer spending reflected increases in services and both durable and nondurable goods. The unemployment rate is low, wages are increasing and people, in general, feel good about their financial situation. The increase in exports reflected increases in exports of goods. Clearly a result of foreign companies purchasing supplies prior to tariff rate increases going into effect.
Concerns, however remain. Last quarter we noted the possibility of the economy overheating. We now believe this is less likely because of the potential impact of a global trade war. Business activity appears to be slowing as companies weigh the odds of there being a trade war or not. As is, the tariff increases that have been implemented are small relative to global trade. The real danger continues to be the uncertainty about what happens next. If trade tensions sap business confidence, causing executives to put off capital spending and other investment decisions, then the damage could get serious. Time will tell.
“History doesn’t repeat itself, but it often rhymes.” – Mark Twain
Financial crises have hit the global markets on a regular basis throughout history. And it appears financial crises will continue to pop up at regular intervals into the future. The first recorded speculative bubble was Tulip Mania in 1637, a period in the Dutch Golden Age during which the prices for fashionable tulip bulbs reached extraordinarily high levels only to dramatically collapse. Today, we view stocks, bonds and commodities as our investments of choice and, as always, current events continue to cause the financial markets to fluctuate, sometimes dramatically.
“History doesn’t repeat itself, but it often rhymes.” – Mark Twain
Financial crises have hit the global markets on a regular basis throughout history. And it appears financial crises will continue to pop up at regular intervals into the future. The first recorded speculative bubble was Tulip Mania in 1637, a period in the Dutch Golden Age during which the prices for fashionable tulip bulbs reached extraordinarily high levels only to dramatically collapse. Today, we view stocks, bonds and commodities as our investments of choice and, as always, current events continue to cause the financial markets to fluctuate, sometimes dramatically.
Here is a brief history of major financial crisis that have hit the globe in the past few decades. Each time, the stock and bond markets have taken a beating. And time and again, they bounce back to higher highs.
Once again, the economic metrics we follow indicate growth is strong around the world. The ultra-loose monetary policies that were implemented due to the financial crises a decade ago have led to an expanding global economy resulting in many countries continuing to see strong GDP growth. Labor markets are solid, global trade is healthy and commodity prices are higher. All of which have led to the best global growth in over seven years.
The U.S. economy is benefiting from a job market that continues to improve. Unemployment is at a historical low of 4.1% and wages are slowly rising – and should continue to do so at an accelerating rate in 2018. Housing is often the greatest indicator of how the consumer feels about the economy. Construction continues to be strong as existing home sales hit an annual rate of 5.81 million homes in November 2017, the highest level since 2006. This is still well below the levels seen in 2005 during the construction boom times. And, U.S. GDP has been revised upward to 3.2% for 2018.
