The Outlook For Economic Recovery
Market analysts use facts to justify their outlook for future performance. There are many facts at their disposal and selecting only the facts that confirm their outlook is part of the game.
Generally, my advice is to tune out those analysts because their track record is spotty at best. I viewed a webinar on one firm’s outlook for the rest of 2021, mostly because I earned 1 hour of CE (Continuing Education credits as a part of maintaining my CERTIFIED FINANCIAL PLANNER™ or CFP license), and in the webinar they used various fundamental statistics to justify that the stock market is fairly valued, pointing out that one particular sector of the market was ‘selling at a discount.’ They just happened to offer the perfect ETF for the sector of the market they were recommending. Buyer and watcher beware!
Our approach to financial planning means that the direction of markets, asset values and interest rates is impossible to predict consistently so we participate in markets in a broad and diversified manner based on your financial goals, not based on our predictions of market performance.
This week also, I read that prominent market analytical firm GMO issued their latest projected returns on various asset classes over the next 7 years. This firm is well known and respected for some previous accurate, yet unpopular projections. These included both market declines and buy signals.
Also included in our philosophy and practice of financial planning is to focus on other important financial and life decisions for you personally. These life events and your framework around decision making in personal finance actually have a larger impact on both increasing your confidence and reaching your goals.
Data this week will help us sort out the characteristics of our economic recovery. As of now, most signs point to a robust recovery. Given the overall growth there are continuing questions about employment and inflation. Either the economy is back on track, or the economy is hitting bumps in the road.
What impact will the Covid-19 surge have on the economic recovery?
The Federal Reserve chairman speaks this week and even he is uncertain about the path forward. Hiring and consumer spending are on the road to recovery as the world reopens but with recommended mask wearing coming back, we shall see how rapid the recovery is. 2nd quarter GDP numbers will be out this week. Of course GDP reports are a lagging indicator. Friday, June inflation data will be reported. Much of the gains in spending and employment were fueled by stimulus checks earlier in the year. Restraints on the economy include supply chain problems, and one example is Apple reported earnings after the market closed and disclosed the difficulty in securing microchips. The stock was lower in after hours trading.
Residents are returning to San Francisco!
The Chronicle reports after a monthly high of 7,000 residents leaving San Francisco, the May and June average was 1,500 residents/month. Still, net migration out but less than previously recorded in what was perceived to be an exodus out of ‘the city.’ According to UC Berkeley, most residents stayed in the Bay Area and I’ve seen more headlines popping up that many who’ve left are making the trek back. Time will tell what happens next.
This website is informational only and does not constitute investment advice or a solicitation. Investments and investment strategies recommended in this blog may not be suitable for all investors. SAS Financial Advisors, LLC and its members may hold positions in the securities mentioned within this newsletter.