Oh boy!
Myself (like many others) must be feeding on
fake news!
I read/follow other reports that indicate that the US economy remains strong and tracking the
mid/growth performing stage of the business cycle. Some of the data sources/analysis (as of the start of 12/2017) that support this notion (that BTW I have followed for the last 6-7 years) are:
a.
Unemployment Rate (Source: Bureau of Labor Statistics) - unchanged from the previous month at 4.1%. Observations from other analysts is that "
Taking a look at the unemployment rate over the course of the year, you can clearly see that we are at the natural rate of unemployment and further improvements in the rate are unlikely. So the focus is much more on wage growth at this stage of the business cycle. In November, average hourly earnings for all employees on private non-farm payrolls rose by 5 cents to $26.55. Over the year, average hourly earnings have risen by 64 cents, or 2.5 percent." They continue by saying: "
That’s not impressive, but was good news as we are seeing a bit of a move from part-time to full-time jobs"
b.
Purchasing Manager's Index (Source: Institute for Supply Management) - according to
other experts in the field, any number above 50 indicates growth in manufacturing and anything over 43.2 indicates an expansion of the overall economy. The November PMI reading was 58.2, and [again]
according to
experts, this a very strong number. Their analysis continues "
A PMI above 43.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the November PMI indicates growth for the 102nd consecutive month in the overall economy and the 15th straight month of growth in the manufacturing sector."
c.
Yield Spread (Source: Cleveland Fed) - their analysis: "
Using past values of the spread and GDP growth suggests that real GDP will grow at about a 1.4 percentage rate over the next year, even with October’s estimate and a bit above September’s 1.3 percent. Although the time horizons do not match exactly, the forecast, like other forecasts, does show moderate growth." The analysis continues by indicating "
Using the yield curve to predict whether or not the economy will be in recession in the future, we estimate the expected chance of the economy being in a recession next October at 11.8 percent, just down from September’s 12.0 percent, which was a drop from the August probability of 12.5 percent. So the yield curve is optimistic about the recovery continuing, even if it is somewhat pessimistic with regard to the pace of growth over the next year."
d.
Money Supply Growth Rate (Source: Trading Economics.com|Federal Reserve) - Some of you may know that the
Money Supply M2 includes savings deposits, money market mutual funds and other time deposits which can be quickly converted into cash or checking deposits) - This number increased from May to June. The reported language states: "
Money Supply M2 in the United States increased to 13747.30 USD Billion in October from 13692.40 USD Billion in September of 2017". The report further adds: "
The growth rate is what is meaningful here, and you can see that growth has accelerated over the past two months – a good sign for an expanding economy."
Their conclusion: "
..these indicators support the US economy remains in the Mid/Growth/Performing stage of the business cycle..." and this the reason [
me, myself and I] continue to keep 100% of my long-term investments in S&P 500 stocks, Small Cap Index type of investments and International funds (Europe and Far East).
@sdre we all know that hindsight is always perfect but for the last several years I have ignored all the noise and all the doom and gloom predictions, followed the above data/analysis and stayed fully invested in the US market without any regrets!
Or perhaps this is all
fake news/hogwash that just by pure coincidence worked out for me! (good thing I did not bailed out of the market in
January of 2016 ) But hey, don't listen to me, am not an economist or financial planner!
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