Economic Insights - July 2019

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As of July 1, the U.S. economy broke a record for its longest expansion ever, with growth in its 121st month, according to the National Bureau of Economic Research. The economy set its previous 120-month expansion record between March 1991 and March 2001. That boom ended when the dot-com bubble burst.

Notably, the rate of growth has been slower this time than during most periods of economic expansion. For example, during the ‘90s boom, the average growth was 3. 6 percent per year. Similarly, the 10 previous economic expansions, going back to World War II, averaged 4.3 percent annual growth. On the other hand, the current expansion period has averaged just 2.3 percent growth per year, mostly because of abnormally slow growth during the Obama years.
Then, in the first week of July 2019, the U.S. stock market reached another milestone with a new all-time high. That milestone followed an historically strong first-half and a very strong month of June. In fact, investors just witnessed the best June for the S&P 500 since 1955 and the best one for the DJIA since 1938! 

After a reset in the 4th quarter of 2018, the first half of 2019 saw the S&P 500 rise 17 percent, while the Business Briefings PARE-5 strategy was up over 37 percent YTD. (For more information on PARE-5 call us at 800-776-1910 or email Fred@audiotech.com).

Notably, the July 1 all-time high for the S&P 500 was the 211th “new high” since 2013. And like nearly every one of those “new highs” it was called “THE TOP” by a wide range of pundits.

Early in the third quarter of 2019, the talk is about how “the stock market has gone almost nowhere in the last 18 months.” The so-called message is that “this bull market is old, tired, and about to die.” These alleged experts forget that during a secular bull market, such as the one we’ve been in since the breakout in early 2013, you usually see huge “run-ups” where new-high-after-new-high is recorded. Then, after that occurs, you typically see the overall stock market “take a breather.” It does so to work off the excesses and that’s when it shakes out the “weak hands” and dispatches the “nervous nellies” before the next run takes prices higher.

These...

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