With Stocks Near All-Time High, Personal Income And Employment Data Are Released

Published Thursday, August 3, 2017 at: 7:00 AM EDT

Real disposable personal income grew 2.8% in the 12 months ended June 30. That's the same rate as in the last economic expansion and is enough to fuel continued economic growth.

Real disposable personal income is a key figure in driving the economy because it is the key determinant of consumer spending and 70% of U.S. growth comes from consumer spending.

Meanwhile, the official unemployment rate declined to 4.3%. That's lower than the bottom of 4.4% in the rate of joblessness achieved in the last economic expansion in spring 2007.

Not since May 2001 has the unemployment rate been this low, and that was at the end of the longest expansion in modern U.S. history.

In addition, the economy has continued to create new jobs - 208,000 of them in June - which was above expectations.

New job creation and a decline in unemployment has been stretched out because the severity of The Great Recession caused more job losses than in past recessions.

The economy cannot keep producing new jobs the way it has in recent years because the U.S. is at full employment, or near it. When companies find that their new positions cannot be filled or take much longer to be filled, they continue to operate but with open positions. However, companies eventually are likely to stop creating new jobs when they cannot fill their current openings. This is likely to happen in the months ahead.

The Dow Jones Industrial Average closed above the 22,000 mark for the first time ever on Wednesday, August 2. The Standard & Poor's 500 index has repeatedly broken its all-time high for months and it closed the week fractionally lower than its all-time high.

At 98 months, the current expansion and bull market is the third-longest in modern U.S. history, and the good times could surpass the longest-ever U.S. expansion, the 120-month-long boom that spanned the entire decade of the 1990s and ended with the tech bubble of early 2000.

A bad surprise could turn sentiment abruptly, and a 10% or 15% price drop is possible any time. However, earnings on the Standard & Poor's are expected by Wall Street analysts to rise by 18% in 2017 and 12% in 2018 - far stronger than the long-term annual average rate of earnings growth of 7%, and the latest economic data released this past week bolstered expectations for continued economic growth, indicates, which drives corporate earnings, so the bull market could also go on for years.

Combined with the one-two punch of tax and financial planning, adhering to a discipline of broad diversification and strategic asset allocation in a low-cost core portfolio that is periodically rebalanced is a smart regimen to prepare for the best of times and worst.

We are independent financial professionals, communicating at a frequency attuned to you.

Get financial wisdom here anytime from your Smartphone, by subscribing to our e-mail newsletter.

The articles written in this newsletter were written by a journalist hired by Advisor Products, Inc. and provided to you by The Clark Group Asset Management. Their accuracy and completeness are not guaranteed. The Clark Group Asset Management is not a legal or tax advisor.

2023

2022

2021

2020

2019

2018

2017

2016

2015

Despite A Lackluster Black Friday, Economic Fundamentals Look Good

Why The New Bull Market Theory Was In The News This Past Week

With the Standard & Poor’s 500 stock index more than 20% higher than its bear market low on October 12, 2022, The Wall Street Journal, The New York Times, Reuters

Read More
Read More

The Clark Group’s mission is to build long-lasting relationships with our clients and help them organize, grow and protect their hard-earned assets through life’s transitions. Along the way, our goal is to provide peace of mind for our clients through trust, thoroughness and transparency. Our experience has taught us that our value comes from helping clients make sound financial decisions while minimizing the emotion that often comes with investing. We are here to guide you through both good and bad economic times.

As a fiduciary financial advisor, we have a legal obligation to always act in your best interest and disclose any conflicts that could prevent us from servicing you. Furthermore, our compensation is fee-based which allows us to be completely objective and aligns our incentives with our client’s best interests. We provide clients in the Los Angeles, Orange County, and Southern California area with investment management, retirement planning, portfolio risk assessment, and charitable giving strategies.

iexodus