Zacks Investment Management

In today’s Steady Investor, we take a look at key factors that we believe are currently impacting the market, such as:

• Consumer spending softening as the year ends
• January 1^st marks new frontier for the U.K
• Unfortunate storm for states and local governments
• China’s booming economy

Better than Expected? – Surging Covid-19 cases, hospitalizations, and deaths have led to softer Q4 GDP growth forecasts. But early fourth quarter economic data is holding up quite well, at least for now. The Institute for Supply Management’s (ISM) November survey showed construction spending rise to its second-highest level on record, and other readings regarding durable goods orders, home sales, and consumer spending showed resilience in October. The Atlanta Federal Reserve’s model for predicting GDP, called GDPNow, is predicting an 11.1% annualized growth rate for Q4, which is a strong improvement from the 2.2% rate predicted just a month ago. If these figures hold up or remain close, it would mark a much better-than-expected growth outcome than consensus estimates basically throughout 2020. To be fair, GDP growth is not back to pre-pandemic levels, and areas of the economy like factory employment, hospitality, and personal incomes are struggling. There are also some signs that consumer spending is softening: data shows that U.S. consumers spent an average of just below $312 on holiday-related purchases from Thanksgiving to Cyber Monday, which is down 14% from spending in 2019. The number of in-store shoppers plummeted 37% from a year earlier on Black Friday, though online shoppers rose 8% on the same day.¹

^{______________________________________________________________________________________________}

Keeping Focus on Your Long-Term Investment Goals!

There are current changes happening within the market that no investor can predict. As we approach the beginning of 2021, inflation concerns and future pandemic uncertainties rise. These challenges are difficult for every investor, but particularly for those trying to build their retirement portfolio.

We still believe it is possible to avoid the damage of economic downturns and achieve your retirement goals. However, achieving these goals involves some work: Defining your investing objectives, determining your asset allocation, managing investments over time.

To help you do this, we are offering readers our free guide that offers a step-by-step blueprint of our customized investing process to potentially help you build a sound retirement portfolio of your own.

If you have $500,000 or more to invest, get this guide to learn our ideas on building and maintaining a retirement portfolio to potentially achieve your long-term goals.

Get our FREE guide: 7 Secrets to Building the Ultimate DIY Retirement Portfolio²

^{______________________________________________________________________________________________}

January 1^st Marks New Frontier for the U.K. – For nearly 50 years, goods have moved with ease from Europe to British ports, crossing the English Channel. On January 1, that free movement is due to end. With Brexit’s implications finally coming into view, the U.K. faces logistical challenges the country has arguably never experienced before. About 10,000 trucks cross the English Channel on ferries every day, moving goods between the French port of Calais and the Port of Dover on the British side. Some officials estimate that for every 2-minute delay a truck faces at the border crossing, it will spur a 17-mile traffic jam on the M20 highway in Britain.³

States and Local Government Budgets Flashing Red – States and local governments have felt the sting of the Covid-19 recession. In 2020, budget shortfalls are estimated to be between $70 billion and $74 billion, with that number potentially rising to over $200 billion in 2021. The onslaught of spending on unemployment benefits, loss of tax revenues from business restrictions, and spending needed to combat the spread of Covid-19 have been a perfect storm for states. When states suffer, the broad economy can feel it too – public-sector spending accounts for 8.5% of the U.S. economy, and 13.1% of all jobs.⁴

China Boom – While much of the world struggles to return to pre-pandemic levels of economic activity, China is showing signs of gaining momentum and strengthening its economy even further. Services and manufacturing indexes in China continue to post expansionary readings, with China’s manufacturing activity registering its highest level in a decade. China’s non-manufacturing PMI, which has generally been a lesser point of emphasis for China’s economy, currently sits at its highest level since June 2012.⁵ With the virus fully under control there, the economic resurgence that started in factories and construction has spread to services and consumption.

During this time of change and uncertainty in the economy, there are things you can do to protect your investments and create a retirement portfolio that meets your financial goals. To help you do this, I recommend reading our guide, 7 Secrets to Building the Ultimate DIY Retirement Portfolio.⁶ It provides a step-by-step blueprint of our customized investing process to potentially help you build a sound retirement portfolio of your own and pursue long-term investing success.
 
If you have $500,000 or more to invest, get this guide to learn our ideas on the step-by-step process to building and maintaining a retirement portfolio that will potentially help you reach your goals and enjoy a secure retirement. 

Disclosure