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Monday 6:30am: It’s A Brand New Day

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You’ll get your first view of U.S. third-quarter economic growth this week. The U.S. economy advanced at a pathetic 1.1% rate through the first half of the year. The Atlanta Fed cut its estimate to 2.4% from 2.8%. In any event, looking at an eighth straight quarter of growth below 3% is not very exciting.

I like to think about GDP at the basic level, as though it’s a paycheck. Imagine two workers, A and B over their 40-year careers. If A can increase his salary by 4%, then after 40-years he will have increased it five times vs worker B’s doubling it after growing at only 2%. Time, and a higher growth rate, are the keys to success.

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Now, compare this to today’s stock market. Stock market prices continue to rise despite slow global growth forecasts for GDP, and despite the worst post-recession recovery since the Great Depression. Worldwide easy money policies have created a charade in markets. As the media trips over themselves with how “great” the third quarter GDP and the stock market look, remember one thing: It’s not real.

gdp

US markets: slow growth in a low interest rate environment

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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