Summer’s Economic Progress Report
School’s out for a summer break, but that doesn’t mean the markets will take a break! In fact, we were encouraging you a few weeks ago to skip the “Sell In May And Go Away” investing theory that believes summer is quiet with nothing to gain by staying invested. This week has provided welcome updates and news stories reminded of the economic strength in place. Let’s review a short progress report to start our summer.
Monday brought a solid jobs report with record unemployment numbers and also record job availability for anyone looking to be employed. The unemployment rate dropped to 3.8% in May, which ties the lowest reading, and we believe this could be headed even lower. This is great news because it means people who can work, would rather do so, than receive unemployment checks or just not work at all. This leads us to believe that the wage for working is rising higher than what you can earn on unemployment. Eventually as wages continue to rise it will continue to pull people off the sidelines and into the workforce in even greater numbers.
Further, the growth of employment is coming from private sector jobs. Private sector job growth means that businesses are hiring and that happens when businesses are doing well. We would prefer to see private sector job growth rather than job growth from an increase in government jobs, which has remained very low.
An area that many investors and analysts are keeping a close eye on is trade with other countries. You have likely heard in the news a story of tariffs or a potential trade war with a variety of countries. In the coming weeks we wouldn’t be surprised to see volatility from meetings that are scheduled to take place with other country leaders. There is still much to be optimistic about regarding trade reciprocity that many economic leaders are working toward. These optimistic comments by top white house economic advisor, Larry Kudlow, may serve as a great reminder of what is being worked toward
In light of strong employment numbers, a strong earnings season, and potential progress in areas like trade we have seen the markets continue to push toward new highs. Year-to-date the US markets are positive, giving us a reason to stay invested.
Remember that staying invested for the long-term, through volatility that comes and goes, will reward investors saving toward future goals.