THE U.S. ECONOMY GREW IN THE FIRST QUARTER, BUT THE RATE OF GROWTH SLOWED:  According to the U.S. Bureau of Economic Analysis, the U.S. economy, as measured by Gross Domestic Product, grew by an annualized rate of 1.1% in the first quarter of the year.  The rate of growth in the prior quarter was 2.6%.  Driving the increase was consumer spending, exports, and government spending.  Consumer spending rose by 3.7%, its largest rise in two years.  But that surge happened early in the quarter and has since slowed down a bit.  Last quarter, businesses let their inventories reduce, which caused the rate of growth to slow.  Businesses do not let inventories get thin when they believe demand will continue apace.  However, when inventories get too thin it is often a harbinger of business spending picking up.  The shelves must get restocked eventually.  The past few years have made it much more difficult for businesses to predict how much inventory they will need, and many stocked up due to supply chain worries.

MEANWHILE IN EUROPE:  The European economy grew by 0.1% in the first quarter.  Its growth rate was flat in the prior quarter.  Inflation is having a much greater effect on spending in Europe than in the U.S.

ANOTHER INFLATION GAUGE DECREASES:  The Fed’s preferred gauge of inflation is the personal consumption expenditure price index.  In March, the index increased 4.2% from a year earlier, down from the 5.1% in February.  If you strip out food and energy, another thing the Fed likes to do, the index increased 4.6% year over year, down from 4.5% a month earlier.

LABOR COSTS REMAIN HIGH:  Employers spent 1.2% more on wages and benefits in the first quarter of the year.  In the fourth quarter of last year, such costs rose 1.1%.  The employment cost index rose 4.8% over the course of the prior four quarters.  That is down from the 5.1% mark registered at the end of last year.

GENEROSITY:  I have been doing more reading on this issue.  It started with hearing someone say, “Have you ever met a grouchy generous person?”  A lot of medical research has been done on this.  Scientific studies have shown that people who are generous have better health.  Spending money on others can be as effective on lowering blood pressure as medication or exercise.  It has a positive effect on life expectancy.  From my observations of clients over the decades, this all makes sense.  So, as you keep up with your portfolio and track all your other financial resources, make room for generosity.  It might improve your health.

STOCKS HAVE A POSITIVE MONTH:  For the second month in a row, U.S. stock prices edged higher.  The S&P 500 ended April up 1.5%.  Corporate earnings reports and other economic data str showing that the economy is slowing but resilient.  This has kept prices stable despite the noise surrounding the banking sector, and especially First Republic Bank.  Meta and Microsoft both announced strong earnings this week causing their shares to rise by 13% and 7.5% respectively, pulling many other tech companies along with them. The Federal Reserve meets again next week.  Most investors are resigned to the belief that the Fed will raise rates once again. 

LONGER-TERM PERFORMANCE:  Below are the annualized three-year and five-year numbers for these same indices.  

PENDING HOME SALES DECREASING:  Pending home sales dropped by 5.2% in March.  This was the largest decline since September.  The primary reason seems to be lack of inventory.  Homeowners with low mortgage rates are reluctant to sell.

A NEW FIREPLACE ON THE WARMEST DAY OF THE YEAR:  We have a gas fireplace that needed to be replaced.  We finally got that work done last week on the warmest day of the year so far.  When they install, you have to let it run for about six hours.  It looks beautiful, but it was a strange day to have a fire going.

THIS WAS AN EASY ONE:  Last Thursday was Take Your Child to Work Day.  I take my child to work every day.

Have a great week!

“You can’t go back and change the beginning, but you can start where you are and change the ending.”  C.S. Lewis

“I know that there is nothing better for men than to be happy and do good while they live.”  Ecclesiastes 3:12

SOURCES:
STOCKS HAVE A POSITIVE MONTH: https://www.wsj.com/articles/global-stocks-markets-dow-news-04-28-2023-434d977a?mod=Searchresults_pos1&page=1
THE U.S. ECONOMY GREW IN THE FIRST QUARTER, BUT THE RATE OF GROWTH SLOWED: https://www.bea.gov/news/2023/gross-domestic-product-first-quarter-2023-advance-estimate
ANOTHER INFLATION GAUGE DECREASES:  https://www.bea.gov/news/2023/personal-income-and-outlays-march-2023 AND https://www.wsj.com/articles/employment-cost-index-q1-2023-personal-consumption-expenditures-price-index-march2023-1d4a191?mod=hp_lead_pos3&mod=article_inline
LABOR COSTS REMAIN HIGH: https://www.wsj.com/articles/employment-cost-index-q1-2023-personal-consumption-expenditures-price-index-march2023-1d4a191?mod=hp_lead_pos3&mod=article_inline
PENDING HOME SALES DECREASING: https://gritcapital.substack.com/p/economic-growth-slows-inflation-persists?publication_id=90117&post_id=117677250&isFreemail=false
MEANWHILE IN EUROPE:https://thehill.com/homenews/ap/ap-business/europes-economy-ekes-out-slight-growth-at-start-of-2023/
GENEROSITY: https://time.com/4857777/generosity-happiness-brain/

(c) 2023 A.D., Stonecrop Wealth Advisors, LLC, All Rights Reserved

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets. 
*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States. 
*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.