Video summary by Tom Young, CFP® below!
The penultimate month of the year is often a time to reflect and offer thanks. And while economic and geopolitical uncertainty can overshadow the positives, there are things to be thankful for. Here is just some of what we’re thankful for:
- Resilient U.S. economy. Coming into 2023, the dreaded R word (recession) seemed a near certainty. But the most recent data showed our economy grew at a strong 4.9% clip (annualized) during the third quarter, the fastest rate since the initial COVID-19 recovery. Even though borrowing costs are rising, the consumer remains in good shape, bolstered by a strong job market and rising wages.
- End of the earnings recession. Solid third-quarter earnings (vs. expectations) mean the earnings recession is almost certainly over. The market’s reaction to results has been mixed at best amid all the uncertainty.
- Easing inflation pressures. Surging inflation and the Federal Reserve’s (Fed) aggressive response were the big stories of 2022. But it seems inflation has eased enough to keep the Fed on hold at its next few meetings. Historically, stock and bond markets have tended to perform well after rate-hiking campaigns.
- Fixed income is an attractive asset class again, despite recent bond bumpiness. After nearly a decade of very modest returns, yields for many fixed income investments are the highest they’ve been since 2007. Starting yields are the best predictors of future long-term returns, so at these higher yield levels, fixed income returns may be higher too.
There’s no doubt this year has been challenging, given increased economic and geopolitical uncertainty. But taking a balanced view on the economy and the markets, we believe there are some positives that may help stocks finish the year higher. Even in the face of potential volatility, focusing on longer-term goals while tuning out short-term noise remains highly recommended.
Video summary by Tom Young, CFP® 11-3-23:
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