…an independent advisory firm building wealth with active portfolio management

GDP is on trend 220730

There was lots of chatter this week about two items.  Item one is a reality.  Item two is babble.

The reality is, over the past six weeks, the S&P 500 is up over 13%.

The babble is, is the economy in a recession?

The explanation for both items is that GDP is trending back to its norm.

GDP growth over my long and wonderful lifetime has averaged 3%.  However, it’s only been 2% over the past couple decades.  And since 2020, it’s had extreme fluctuations, which have all been artificially induced.  (Given the global Crony Capitalist Statist Fascist economy that exists, “artificially induced” is a relative term.)

The 2020 excessive GDP decline of 3.4% was caused by government shutdowns.  The 2021 excessive GDP growth of 5.7% was caused by government largess.  This year’s lack luster GDP (estimated at 1.7%) is below trend, but well within norms.  Post 2008-2009 Housing Crisis Great Recession, GDP has been slightly above or below 1.7% nearly 38% of the time.  Today’s economic reality is neither hot nor cold, it’s status quo blasé.

Depending on future government intervention (the Midterm elections could result in two years of gridlock…my favorite form of democracy) GDP growth will very likely return to its 21th Century trend of 2% which has resulted in S&P 500 annualized growth of about 7%.

People that panic and sell during downturns never achieve those very sustainable growth rates of 7%.

If you find these ALERTs informative, please share them with a likeminded friend AND reference this post on your website or social media channels.