Weekly Investment Update
Top 10 Indications The Economic Outlook Is Brighter Than Expected
Published Friday, August 17, 2018 at: 7:00 AM EDT
Here are the 10 top facts indicating the U.S. economy is stronger than expected.
10. The Index of U.S. leading economic indicators ticked up for the third month in a row — +0.6% in July, +0.5% in June, and +0.1% in May — and it is designed as a forward-looking index of 10-subindexes.
9. The 4.3% growth rate forecast from the Federal Reserve Bank of Atlanta — a model that grows more accurate as the end of a quarter nears — towers over the 2.2% quarterly growth rate averaged since the end of The Great Recession in March 2009.
8. Retail sales are gangbusters, growing 50% faster than in the last economic expansion.
7. Sales at bars and restaurants grew 9.3% in the most recent 12 months. People are into partying.
6. The Small Business Optimism Index hit its second-highest level in its 45-year history in July, and small business creates 70% of net new jobs in the private sector.
5. Employee wages and benefits, as measured by the Employment Cost Index, rose a sharp 2.8% in the second quarter of 2018, but the higher cost was not passed on to consumers and the overall rate of inflation remained just.
4. Productivity surged in the second quarter of 2018, which explains why inflation did not rise as fast as wages and benefits, and that's about the best thing you could hope for: increased productivity.
3. Labor costs, by far the biggest driver of inflation, declined in the second quarter, reflecting the surge in Q2 productivity.
2. The difference between the nominal 10-year U.S. Treasury bond yield and the yield on Treasury Inflation-Protected Securities (TIPS) indicates the market's expectations of a 10-year inflation rate of 2.1%, which is just what the Federal Reserve expects and is in line with current Fed policy.
1. Hopes for synchronous U.S. and foreign growth were dispelled in recent months by slowing growth in China and Europe, and heightened fears of a trade war, but the latest International Monetary Fund forecast for 3.9% world growth in 2018 and 2019 indicates that predictions of the demise of foreign and U.S. growth synchronicity were exaggerated.
This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.
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