Mixed Economic Signals 10/3/19

There are some mixed economic signals showing up in our economy. Some of the data coming out the last few months has been very good and some not so much.

First the good news – Consumer spending continues to show strength, wages have increased, and inflation remains low. Unemployment rates in the US remain near record low levels.

The Federal Reserve forecasts unemployment to remain in a range of 3.6%-3.9% for the next 3 years. They also forecast a GDP growth range of 1.8%-2.0% and an inflation rate of 1.8%-2.0%. Overall, continued growth of the US economy.1

Now the not so good news – The ISM Manufacturing Index has been steadily declining since late last year and are now at a level last seen in 2016. The latest number released this week included the GM strike but overall the manufacturing sector has slowed. This means that purchasing managers are buying less now and this may lead to a further slowdown in the manufacturing sector.

The continuing trade dispute with China does have a small and continuing impact on our economy, estimated to be up to .2% of GDP.

This week, the equity markets in the US have declined from near record highs as the news media outlets focus on the possibility of a recession coming to the US economy. The focus has been on negative data and political uncertainties. Although there seems to be no shortage of pundits who will forecast when the next recession will start and end, we feel it is important to look at the facts and past history to guide us for the future.

At Prato Capital Management, over the past few months we continue to see the media hyping any positives and negatives to keep viewers emotionally involved and tuned into their channels.

We believe this is a perfect time to have a Financial Life Plan based on your risk tolerance and financial goals. It can provide peace of mind during volatile markets and will allow you to “Tune Out the Noise” of the media and focus on what is most important to you.