As the U.S. continues to rebound from the pandemic to new heights,\nthere are important factors to keep in mind. In today\u2019s Steady Investor, we\ntake a look at key factors that we believe are currently impacting the market,\nsuch as:<\/p>\n\n\n\n
The U.S. Economy\nGrows to Pre-Pandemic Size, and Then Some \u2013 <\/strong>The U.S. economy posted another\nstout quarter of GDP growth in Q2, though the first estimate came in fairly far\nbelow expectations. The Bureau of Economic Analysis reports that the U.S.\neconomy grew 6.5% in Q2, well below the 8.4% consensus estimates. This GDP\ngrowth puts the country back above its pre-pandemic size, and more growth is\nexpected in the second half of the year. The expansion continues to be driven\nmostly by consumer spending, which rose at a firm 11.8% pace in the three\nmonths ending June 30 \u2013 the second-best performance since 1952. Consumers are\nstill spending more on goods than services, but in recent months services started\nto catch up as Americans re-engage with the physical economy, i.e., with more\ntravel, trips to salons, restaurants, and the like. Importantly, business\ninvestment was also a big contributor to growth in Q2, as businesses increased\nspending on technology upgrades, equipment, software, and R&D. The labor\nmarket is tight and wages are being pressured higher, which has arguably pushed\nbusinesses to invest more in technology and other means of boosting\nproductivity. Even with the strong growth rebound, the U.S. economy is still\nabout 2.4% smaller than it would have been (estimated) had the pandemic never\nhappened. The labor market has not caught up to pre-pandemic levels, either \u2013\nthere are still 7 million fewer jobs today than before the pandemic. Other\ndetractors from GDP growth in Q2 were inventories and trade. As consumer demand\noutstripped supply, businesses sold down inventories and struggled to bring\nmore goods back online.1 On the trade front, since imports detract from GDP,\nthe U.S.\u2019s trade deficit pulled down growth in Q2.<\/p>\n\n\n\n ___________________________________________________________________<\/p>\n\n\n\n Everything You Need to Know About a Potential Bear Market!<\/a><\/strong><\/p>\n\n\n\n Throughout the pandemic, we\u2019ve seen the stock market plunge numerous times just to bounce back up. With so much volatility, many investors are worried another bear market is around the corner. That\u2019s why there is no better time for investors to gain a better understanding of bear markets and how they work. ___________________________________________________________________<\/p>\n\n\n\n Is the Fed Tip-Toeing\nCloser to Monetary Tightening? <\/strong>Most readers are aware of the Federal\nReserve\u2019s extraordinary measures to stimulate the economy in the wake of the\npandemic. Rates were lowered close to the zero bound almost immediately, and\nmonthly Treasury and mortgage bond purchases to the tune of $120 billion have\nbeen \u2018designed\u2019 to further boost the economy. The jury is still out on whether\nthese bond purchases actually work effectively, but that is another topic for\nanother day. This week, the Fed\u2019s meeting was as closely watched as any, as\nmarket watchers were looking for even the slightest hint that the Fed would\nstart to back off its stimulative measures\/programs. And they got a strong hint:\nthe Fed said \u201cthe economy has made strong progress\u201d towards the goals set early\nin the pandemic, which could be an indication that the bond purchases can be\nwound down. In our view, this Fed action would be a good thing \u2013 bond purchases\nhave the effect of holding down the long-end of the yield curve, keeping it\nrelatively flat. A steeper yield curve is better for the economy, in our view,\nas it gives way to a more profitable environment for bank lending. As for\nraising short-term interest rates (Fed funds), don\u2019t count on it \u2013 Federal\nReserve Chairman Jerome Powell said there are no plans for rate increases\nanytime soon.3<\/sup> <\/p>\n\n\n\n Economically Adapting\nto Covid-19 and Its Mutations \u2013 <\/strong>News\nof rising cases of the Delta variant is increasing around the world, but in\nWestern countries, each successive wave has been causing less and less economic\ndamage. Vaccines have been a key factor in avoiding the most deleterious of\neconomic impacts, as Western countries have relatively high vaccination rates\nand have not needed to resume lockdowns, as we\u2019re seeing in countries like\nAustralia, Vietnam, and Indonesia. But improving economic outcomes with each\nnew surge of cases is also tied to businesses and governments adapting to doing\nbusiness and living with the pandemic. Businesses have developed new protocols\nfor keeping workers safe, including distancing and spacing out worker shifts, and\nallowing for more remote work capabilities. Some are taking even more drastic\nmeasures as we saw at Facebook and Google this week, where vaccinations would\nbe required to return to campuses. All this to say, the threat of another\neconomic lockdown \u2013 and associated recession \u2013 appear low even as new cases\nrise.4<\/sup> <\/p>\n\n\n\n Prepare for Potential\nDownturns<\/strong> – If the pandemic has\ntaught investors anything, it is just how quickly the stock market can change,\nand how critical it is for investors to know how bear and bull markets work.<\/p>\n\n\n\n To help you\nunderstand market downturns and steps you can take to protect your assets\nduring the next bear market, you\u2019re invited to get our free guide – Everything\nYou Need to Know About Bear Markets<\/em>.5<\/sup> <\/p>\n\n\n\n If you have\n$500,000 or more to invest, get this helpful guide today. It walks through the history\nand types of bear markets, how investors typically react to extreme volatility,\nand what we can learn from the history of bear markets and pandemics.<\/p>\n","protected":false},"excerpt":{"rendered":" U.S. GDP is above pre-Covid numbers…is it enough? Plus latest Fed moves and how businesses are handing the Delta variant <\/p>\n","protected":false},"author":3,"featured_media":7426,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-9751","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9751","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=9751"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9751\/revisions"}],"predecessor-version":[{"id":10344,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9751\/revisions\/10344"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=9751"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=9751"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=9751"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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To help you understand market downturns and steps you can take to protect your assets during the next bear market, you\u2019re invited to get our free guide –\u00a0Everything You Need to Know About Bear Markets<\/em>.2<\/sup>
\u00a0
If you have $500,000 or more to invest, get this helpful guide today. It walks through the history and types of bear markets, how investors typically react to extreme volatility, and what we can learn from the history of bear markets and pandemics.
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Download –\u00a0<\/a><\/strong>Everything You Need to Know About Bear Markets<\/a><\/strong><\/em><\/p>\n\n\n\n