Some positivity going into Christmas tomorrow, retail sales rose in November and the October number was revised up. Retail sales, year-over-year, is up 4.3%, which is a great number. That report is consistent with a higher than expected GDP number for the fourth quarter. We say all the time that 70% of the GDP number is consumer spending, which has been positive leading up to Christmas. This week, earning season starts and will be important in a volatile market to generate positive earnings.
It’s been a record year of payouts. Looking at some of the volatility in the market, a lot of people forget that the people who are running these large companies are sharp individuals. From a confidence point of view, they are paying money out in dividends this year at a record rate. Stock dividends are at record highs, up about 9% this year. A piece of those payouts earlier in the year was from the tax reform pushing it. Next year it will more than likely go at about a 6% cleft which shows corporate America being confident that their balance sheets and income statements are strong enough, with future business, that they can pay a lot of their dividends. Confidence in the consumer and in America makes a huge difference.
We went about ten years without any significant infrastructure spending by state governments and municipal governments because tax revenues were down. We were coming out of the back of the financial crisis so, just about all states and cities could do was keep themselves operating at the state level. They paid Medicaid entitlements and kept up with their pension funds, but now, as Bobby said, because of the consumer confidence and people spending, tax revenues have gone up. Suddenly, these infrastructure projects are up 10 percent year-over-year. Going into 2019, where some areas of the economy have been a little bit soft, that infrastructure spending is going to be huge and could cause a major multiplier effect. There’s a lot of new employment that comes with it and not only will it be good for those areas it will also be good for those growing companies.
Greg Powell, CIMA®
President and CEO
Email Greg Powell here
Bobby Norman, CFP®, AIF®
Senior Vice President
Email Bobby Norman here
Ashley Page, JD, MBA
Senior Vice President
Email Ashley Page here
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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