Oct 4, 2019
This week, I’m talking about “why I don’t think a recession is looming.” Ok, I realize that I don’t have a crystal ball, but I seldom talk to a client these days who isn’t worried about the state of the economy and their investment portfolio. Despite double digit returns in the stock and bond markets in the first 3 quarters of 2019, investors out there are just downright scared.
So we gotta tackle this head on and talk about what is going on in the world right now - what’s driving the economy and the stock market, and take an honest look at where we might go from here.
Earlier this week, I talked about a couple of leading economic indicators that are worth paying attention to because they are strong predictors of the direction of the economy - housing starts and consumer sentiment.
Today & tomorrow, I’m talking about 2 more reasons to continue to stay positive about the economy - jobs and corporate profits.
The jobs data is still positive. According to Confluence Investment Management, a money manager that I closely follow, “The labor market data suggests a recession isn’t imminent, meaning investors should avoid becoming overly defensive at this juncture.”
So why are jobs relevant for the state of the economy? The creation of new jobs signals business are hiring and are still positive about the future. Large and small businesses alike are usually very cautious about bringing on new employees and will only do so if they are positive that the new people brought on will fuel further growth, rather than cause a cash crunch if the economy slows.
In addition, wages are growing and the unemployment rate remains shockingly low at 3.7% which is just about the lowest it’s been over the last 50 years.
So, keep an eye on how the jobs data changes over time. Job growth has slowed this year, but that’s mostly because businesses are running out of people to hire.
That’s it for today. Before you go, please take a minute to leave an honest review for the One Minute Retirement Tip in Amazon or iTunes. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.
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