2<\/sup><\/p>\n\n\n\nData suggest U.S. companies are optimistic.<\/p>\n\n\n\n
Private nonresidential fixed investment \u2013 a proxy for business investment \u2013 jumped 7.4% in 2021, even when adjusting for inflation. This uptick in business spending marked the fastest rate of increase since 2012.<\/p>\n\n\n\n
Perhaps not surprisingly, U.S. businesses spent the most on software and information-processing (blue line in the chart below), as the need to \u2018digitize\u2019 business operations was catalyzed during the pandemic and is bound to grow as remote work becomes the norm. Spending in this area of IT rose a stout 14% in 2021. The trend of ramping up business investment looks poised to continue: manufacturing firms surveyed by the Institute for Supply Management said they plan to increase investment by 7.7% in 2022, and services firms \u2013 which comprise a majority of the U.S. economy \u2013 expect a 10.3% increase.<\/p>\n\n\n\n
Business Investment on the Rise, Particularly in Software and IT<\/strong><\/p>\n\n\n\nSource: Federal Reserve Bank of St. Louis3<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n2. Leading Economic Indicators are High and Rising<\/strong><\/p>\n\n\n\nThe Conference Board\u2019s Leading Economic Index (LEI) is a useful indicator that can help investors gauge whether U.S. economic activity is in growth mode, plateauing, or decline. The LEI aggregates a handful of key leading indicators, like average weekly hours worked, jobless claims, manufacturer\u2019s new orders, building permits, credit, consumer expectations, and more. In the LEI\u2019s 50+ year history, only one recession has occurred when the index was high and rising \u2013 the 2020 pandemic-induced recession, which I would call an exception that proves the rule.4<\/sup><\/p>\n\n\n\nAt present, the LEI is hovering at all-time highs and is still notching increases, signaling growth mode here in the U.S. In February, the LEI increased by 0.3%, which followed a 0.5% decrease in January but a 0.8% increase in December. Importantly, the 6-month look at the LEI shows a 2.1% increase from August to February, again underscoring positive economic momentum in the U.S.<\/p>\n\n\n\n
Altogether, the Conference Board sees 3% year-over-year U.S. GDP growth in 2022, which is a far cry from recession territory for the U.S. economy.<\/p>\n\n\n\n
3. The Jobs Market is Historically Strong<\/strong><\/p>\n\n\n\nThe U.S. jobs market is strong and keeps getting stronger.<\/p>\n\n\n\n
In the latest jobs numbers release, U.S. employers were seen adding 431,000 jobs in March, with particularly strong hiring in services industries like restaurants and retail. The Labor Department also said that hiring in January and February was stronger than initially reported, signaling that the jobs market is arguably better than most appreciate.5<\/sup><\/p>\n\n\n\nThe latest release marked the 11th<\/sup> straight month where job gains totaled more than 400,000, which marks the longest stretch of consecutive gains dating back to 1939. The unemployment rate fell to 3.6%, which now puts it very close to its pre-pandemic level of 3.5% (which is also a 50-year low). Put simply, labor markets like this one are not the stuff of recessions.<\/p>\n\n\n\nBottom Line for Investors<\/strong><\/p>\n\n\n\nI write often that the stock market can thrive in scenarios where widely-known negative stories receive all the attention, while under-appreciated but important economic fundamentals are overlooked. This dynamic is the definition of stocks climbing the \u2018wall of worry,\u2019 and I think it accurately describes the setup for the U.S. economy and markets heading into Q2.<\/p>\n\n\n\n
As we wait to see how the market plays out, it doesn\u2019t mean you can\u2019t stay on top of issues that are currently impacting the market. To help you better focus on data, I am offering all readers our\u00a0Just-Released April 2022 Market Strategy Report.\u00a0<\/a><\/u><\/strong>Did the Fed All of a Sudden Become More Hawkish?<\/em><\/li>Stagflation Concerns are on the Rise<\/em><\/li>Is the Stock Market Correction Really Over?<\/em><\/li><\/ul>\n\n\n\nAnd much more\u2026<\/em>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today! <\/p>\n","protected":false},"excerpt":{"rendered":"Amidst all the negative stories, there are some positive signs that could drive stocks upward in the months ahead <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71],"tags":[],"class_list":["post-11621","post","type-post","status-publish","format-standard","hentry","category-mitch-on-the-markets","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11621","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=11621"}],"version-history":[{"count":7,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11621\/revisions"}],"predecessor-version":[{"id":11631,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/11621\/revisions\/11631"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=11621"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=11621"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=11621"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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