In the current election cycle, we have often found it surprising that the prevailing mood about the economy is so negative. From our perspective, the US economy and the financial markets have been surprisingly strong. We are not the only ones puzzled by the prevailing sense of economic negativity in the U.S.
The accompanying blog post from Ben Carlson reviews data published in a recent issue of the London-based Economist magazine. Carlson indicates that Europeans must wonder “What’s wrong with you bloody Americans?”
While the Covid-19 pandemic certainly led to a historic drop in employment and economic growth, these declines were soon followed by similarly historic improvements in both metrics. The pandemic also led to a major supply disruption, which together with a slow-to-respond Federal Reserve, resulted in a huge spike in inflation. Annual headline inflation peaked at 9.1% in mid-2022, but that too has turned around, with the latest 12-month reading coming in at 2.3%.
While the Fed’s belated but aggressive rate hiking ultimately succeeded in lowering inflation, it was also widely expected to cause both a recession and high unemployment. But those expectations proved to be unfounded. Unemployment has remained impressively low while the economy has continued to grow at a very healthy clip.
The stock market has also been healthy, with the S&P 500 gaining over 90% in the last five years.[1] From where we sit, Mr. Carlson and his take on the European perspective all seem quite reasonable.
Disclaimer: Investing in the stock market involves risk, including the possible loss of principal. The performance of the S&P 500 or any other index mentioned in this material is for illustrative purposes only and does not represent projected performance of any specific investment product or strategy. Past performance is not indicative of future results, and there is no guarantee that the market or any investment strategy will perform in a similar manner in the future. Economic and market conditions can change rapidly, impacting the value of investments. Investors should consider their individual risk tolerance and consult with a financial advisor before making any investment decisions.
[1] Source = YCharts, through 10/22/24. Past performance cannot be relied upon as being indicative of future returns. Investing involves the risk of loss, and stock market returns can be quite volatile. The future of the economy is similarly unpredictable.
Steve Ellis has spent his career making an impact, so it’s not surprising that Colorado Capital Management’s founder and president launched the firm’s entry into impact investing.
Editor’s Note: This blog post is for informational purposes only and does not constitute financial, legal, or tax advice. Readers are encouraged to consult with a qualified professional regarding their individual circumstances. Please refer to our firm’s website for full disclosures and important information: CCM Website Disclaimer
