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U.S. ECONOMY BOUNCES BACK INTO GROWTH: According to the U.S. Bureau of Economic Analysis, the U.S. economy expanded at an annual rate of 2.6% during the third quarter of 2022. This comes after two consecutive quarters of negative growth. Much of the growth was fueled by U.S. households spending much less on foreign goods (when spending shifts to domestic goods, it increases GDP), and the U.S. exported a lot more, especially energy related goods. The shift in trade helped boost the GDP number. Personal consumption expenditures rose 1.4% in the third quarter, but this number has been trending down (it rose 2% in the prior quarter). The ongoing question for the future is whether inflation will slow spending too much, sending us back to negative growth in the quarters to come.
(Source: bea.gov/news/2022/gross-domestic-product-third-quarter-2022-advance-estimate) |
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| STOCKS CONTINUE TO RISE: In another week with ups and downs, stocks ended decisively higher yet again this week. Big gains by Apple on Friday punctuated the week and helped carry the market to a second strong week, and the continuation of a solid month of gains. The announcement that the economy grew at a higher-than expected rate last quarter also fueled buying activity. Amazon fell 6.8% on Friday following its downbeat guidance after Facebook lost nearly 25% the day before, but that was not enough to drag down the major indices. This is an indication that the markets are moving ahead this month despite the tech sector, not because of it. Earnings reports from companies in other sectors have been quite strong such as Exxon Mobil, Chevron, several U.S. Banks and Caterpillar. All told, earnings reports so far are showing 2.2% growth which, while positive, is the lowest year over year results since 2020. |
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| LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices. |
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| INCOME AND SPENDING INCREASED IN SEPTEMBER: Personal income for Americans rose by 0.4% in September. Spending increased by 0.6%. If spending increases more than income, that spending money is either being taken from savings or borrowed, hence the next story. |
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| CREDIT CARD BALANCES CREEPING UP: Total credit card balances have now returned to where they were pre-pandemic. The total hit $916 billion in September, roughly the same as December of 2019. |
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| THE HOUSING SECTOR IS SLOWING DRAMATICALLY: Spending on residential construction decreased by 26.4% in the third quarter after a 17.8% decline in the second quarter. Meanwhile, the Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, slowed by 10.2% in September, and year-over-year that index is down 31.0%. The housing sector is now in a recession, clearly triggered by rising interest rates. |
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| LABOR CONTINUES TO BE MORE EXPENSIVE: The employment-cost index, a measure of worker wages and benefits, rose 5% in the third quarter from the same period a year earlier. That was a slight slowdown in the rate of increase from the prior quarter. |
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TIM ROBBINS ON COMMUNITY: Tim Robbins is a highly talented, and very politically outspoken individual. He does not mince words, and so if you disagree with his political views, then some of his statements may have rubbed you the wrong way in the past. But in a recent interview, he was reflecting on how his thinking has evolved regarding how we should work harder at finding opportunity to spend time with people with whom we might not agree. Face to face, it is more difficult to be hateful. Here in Philadelphia, as the Fightins get ready to continue their improbable attempt at a World Series title, I thought some of his statements were apropos:
“If you told me 20 years ago that there would be no video stores where you could talk to a clerk and see what that person might be recommending, or no record stores where you could go see what’s new in music, or no bookstores in most towns, I would’ve told you you were crazy. But we’re here. This is part of a larger movement away from the gathering place.
“Theaters are failing, and movie theaters are not doing so well. Any form of gathering place other than a bar has pretty much been hurting. You know, it’s no surprise to me how well sports have been doing during this whole period. Stadiums are packed, because people need community.
“I’ve always thought of baseball as a place where I can go and get away from the politics and just sit and high-five some dude that might have voted for someone I don’t like. That’s important.”
The remainder of the interview is here.
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| HITTING HOME: Often I will read the international news and read of some tragedy. These stories of war, famine, or disease seem so far away, physically and emotionally. As many of you know, in May I went to Kampala, Uganda, my first trip to Africa. Kampala is a very thickly settled city of about 1.7 million people. I went there with an organization I support that works with schools in that country. It was an unforgettable trip, and I would go back tomorrow to see some of those wonderful people again. |
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| This week I have been reading about an Ebola outbreak in Kampala. Six school children in Kampala have tested positive for Ebola, and there is obvious concern about a significant outbreak. They suffered immensely during the COVID lockdowns. These pictures I took in May now take on more emotional gravity. I pray for their safety. |
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Our mission is to help you see the objective, find the path, and navigate past the obstacles to a more prosperous future.
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Douglas R. MacGray, J.D., C.F.P. ®
President
Stonecrop Wealth Advisors, LLC
Direct | Cell | Fax
(610) 628 4545
dmacgray@stonecropadvisors.com |
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| “I guess it comes down to a simple choice, really: Get busy living, or get busy dying.” Andy Defresne in The Shawshank Redemption
“Build houses and live in them; plant gardens and eat their produce…seek the welfare of the city.” Jeremiah 29:5,7 |
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SOURCES:
STOCKS CONTINUE TO RISE: wsj.com/articles/global-stocks-markets-dow-update-10-28-2022
CREDIT CARD BALANCES CREEPING UP: wsj.com/articles/credit-card-debt-returns-to-levels-before-covid-19-pandemic
INCOME AND SPENDING INCREASED IN SEPTEMBER: ea.gov/news/2022/personal-income-and-outlays-june-2022
THE HOUSING SECTOR IS SLOWING DRAMATICALLY: nar.realtor/newsroom/pending-home-sales-waned-10-2-in-september AND msn.com/en-us/money/markets/why-the-gdp-rebound-isn-e2-80-99t-soothing-recession-concerns/
LABOR CONTINUES TO BE MORE EXPENSIVE: wsj.com/articles/us-inflation-wages-employment-cost-index |
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| (c) 2022 A.D., Stonecrop Wealth Advisors, LLC, All Rights Reserved |
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*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 Barclays U.S. Aggregate: This is a measure of the U.S. bond markets. |
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Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.
SDG
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