The best indicator to determine the risks of recession and the health of the US economy is to focus on the people and businesses of the economy that combined represent 88% of the US Gross Domestic Product
. The employment market is near capacity, as evident by the 3.6% unemployment (a drop from the previous month of 3.8%) and 11.5 million job openings. More importantly, consumers have more disposable income now than before the pandemic, along with job stability.
Businesses are bullish on their growth, as evident by one of the biggest gains in recorded history of factory orders despite supply chain challenges caused by the war on Ukraine.
Based on the above, our view remains favorable on the US economy and the prospects of a recovery from the current stock market selloff. That said, we want to pay attention to real evidence of risk that will be apparent with consumers first and then businesses. For consumers, we want to monitor changes in household incomes, sentiment, spending, and employment. For businesses, monitor changes in profit, hiring, factory orders, and retail sales. Until we see declines in these indicators, the evidence indicates stock market and economic conditions remain stable.
Let us know if you have any questions about this Weekly Brief. More importantly, give us a call or send an email to discuss creating your retirement plan to achieve financial independence that includes developing an investment strategy for your retirement and personal accounts. We welcome the opportunity to assist you on your journey.