After the release of last
week’s impressive GDP headline of 3.2%, some analysts noted that a deeper look
beyond the headline number revealed that not all the innards were was as rosy
as the headline. Harvard Professor Jason
Furman noted that “The underlying trend of consumption and investment is
weakening.” In fact, private-sector
consumption and investment slowed to just a 1.3% annual rate in the first
quarter, the slowest in nearly six years.
Furthermore, consumer spending rose only 1.2% in the first quarter,
after healthy 2.5% growth the previous quarter, and spending on durable goods
plunged 5.3%, the worst since 2009.
Professor Furman notes that the 3.2% GDP reading was deceptively boosted
by several one-off factors—improvement in the trade balance, a large build-up
in inventories and higher spending by state and local governments. The private-sector slowdown is illustrated by
the following chart, from Haver Analytics.
Womack Weekly Commentary September 18, 2017 The Markets “In theory, there is no difference between theory and practice, in practice there is.” Yogi Berra was talking about baseball, but the concept also applies to diversification, according to the GMO White Paper, The S&P 500: Just Say No . From the title, you might think the authors – Matt Kadnar and James Montier – don’t like U.S. stocks. They do: “Being a U.S. equity investor over the past several years has felt glorious. The S&P 500 has trounced the competition provided by other major developed and emerging equity markets. Over the last 7 years, the S&P is up 173 percent (15 percent annualized in nominal terms) versus MSCI EAFE (in USD terms), which is up 71 percent (8 percent annualized), and poor MSCI Emerging, which is up only 30 percent (4 percent annualized). Every dollar invested in the S&P has compounded into $2.72 versus MSCI EAFE’s $1.70 and MSCI Emerging’s $1.30.” The au...
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