Economic Update – Q2 2018
What we’re watching:
As the second longest economic expansion on record in the United States entered another year, questions around potential catalysts for greater gains arose. With economic data still solid, and the effects of the corporate tax cut not yet fully felt, the case for equities remains intact.
A focus on global central bank policy remains a prudent approach. Now that the move towards tighter monetary policy has begun, the pace and method of tightening will determine the reaction in bond and stock markets.
The threat of a government shutdown, adoption of tariffs, and an unclear path on immigration policy have created recent volatility in the U.S. markets. With mid-term elections on the horizon, the divide between Republicans and Democrats could have a meaningful impact on investor sentiment.
U.S. GDP for the fourth quarter of 2017 came in at +2.5% quarter-over-quarter compared with a third quarter reading of +3.2%. Driving the deceleration in growth was strong consumption, which clocked in at +3.8%, but led to higher imports and a decline in inventories.
Growth expectations for first quarter GDP are approximately +2.5%, although estimates have shrunk based on data pointing to modestly weaker consumption and business investment in the quarter.
Manufacturing remains in expansionary territory, as the Institute for Supply Management’s manufacturing survey closed the quarter at 59.3. However, new orders and employment dipped from February, when the survey topped the 60 mark.
Eurozone manufacturing, too, weakened modestly from February to March, falling from 58.6 to 56.6. Indications are that the sentiment component of the measure may have weakened based on concerns around protectionist measures initiated by the U.S.
Consumer confidence fell modestly to close the quarter. The Conference Board’s March survey declined to 127 from 131 in February, due to drops in both the index for current conditions and future conditions, likely reflecting increased volatility in the equity market.
Employment remains strong, averaging an additional 202,000 jobs each month for the first quarter of 2018, despite only adding 103,000 jobs in March. With the employment rate holding steady at 4.1% in March for the sixth straight month, wages should continue an upward trend.
View all Articles in this Issue:
The opinions expressed and information contained in this publication are given in good faith, may be subject to change without notice, and are as of the date issued. This publication discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice and does not represent a complete analysis of every material fact with respect to the economy, financial markets, interest rates, and any industry or sector mentioned in the publication. The graphs and charts presented were created for informational purpose only and use data sourced from Bloomberg and Morningstar. The accuracy and completeness of sourced data is believed to be reliable, but has not been independently verified.
There is no guarantee that Boston Private Wealth’s investment management services will achieve their objectives.
Investment products mentioned herein including stocks, bonds, and mutual funds may lose value and are not insured or guaranteed by Boston Private Wealth. Boston Private Bank & Trust Company or any affiliates or by the Federal Deposit Insurance Corporation or any other government agency. Past performance is not indicative of future results, which may vary.
Equity securities are subject to stock market fluctuations that occur in response to economic and business developments.
Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments and yields and share price fluctuations due to changes in interest rates.
International investing involves unique risks, including foreign taxation, foreign currency fluctuation risks, risks related with possible variances in financial standards and other risks associated with potential political, social and economic developments. Investing in emerging markets may involve greater risks than investing in more developed countries.
In addition, concentration of investments in a single region may result in greater volatility. Due diligence processes seek to diminish, but cannot eliminate risk, nor do they imply low risk. Asset allocation, diversification and rebalancing do not guarantee a profit or protect against a loss in declining markets.
About Boston Private Wealth
Boston Private Wealth LLC (“BPW”), a registered investment adviser, offer investment management & consulting, wealth advisory and planning, and family office services as well as private banking and trust services in partnership with its parent company, Boston Private Bank & Trust Company (“BPBTC”).
BPW is a wholly-owned subsidiary of BPBTC, which is wholly-owned by Boston Private Financial Holdings, Inc. (NASDAQ: BPFH).
You may also like
The opinions expressed and information contained in any article published in the Vault are given in good faith and considered reliable. However, such opinions and information are subject to change without notice and are provided only as of the date issued. Neither Boston Private nor its affiliates warrant the completeness or accuracy of such information. Any third-party opinion is solely the opinion of its author and does not necessarily reflect the opinion of Boston Private or its affiliates. The materials on this website are for informational purposes only and do not take into account your particular investment objective, financial situation or need. Since each client’s situation is unique, you should consult your financial advisor and/or tax planning professional before acting on any information provided herein.