Seeking Positivity
Lately, we’ve been getting a lot of negative economic reports and believe we’re overdue for some good reporting. Hopefully the jobs report that comes out this Friday will be the catalyst or x-factor we are looking for to generate some positivity. Economists expect around a 1% jobs growth gain for February and for the second quarter of 2019 the expectation is even higher at 2%. That 1% calculates to around 185,000 jobs. Friday’s report should shed some more light on this. If it’s below the average we might see some volatility, but, if it’s above that mark we could potentially see positivity in the markets. The job reports last month easily beat expectations and it would be great to see that again since some reports we’ve been seeing, such as manufacturing and other economic reports, have been going in the wrong direction.
Manufacturing
In looking at manufacturing it appears as though indices were off last week. However, if you do the research on it and dig a little bit deeper, part of that is the underlying uncertainty with China still. One of the main contributors in February is that the Midwest, which is heavy in manufacturing, was hit with tremendous winter storms. For example, if “Company A” is in Kansas City and customer “Jon Doe” is in Chicago, you would see a disruption in supply chain. You will most likely see a little bit of a dip, mostly weather-related, but it will probably go back up for the manufacturer as the weather starts to clear. The manufacturers are holding off and aren’t going to spend a lot of money right now if they’re still unsure how this will go.
Tax Refunds
Tax refunds are starting to come in and is one of the catalysts that we are looking for that could move the economy a little faster. We’re looking for something like a little sugar rush at the end of the first quarter that could provide a boost. Fourth-quarter 2018 GDP came in at 2.6% which is a little lower than where it had been. People were expecting 1.9% for the first quarter, so, data is coming in a little low and choppy but hopefully job numbers will continue to hold strong. People with jobs are supposed to pay taxes and hopefully those people paid those required taxes all last year because under the new tax code, people should receive a better-than-expected refund this year. It started off a little slow but if you have a whole new tax code then it takes longer to do your taxes, so, we’re starting to see a real pickup and refunds being sent out. Most people usually get a tax refund, but it doesn’t stay in the bank for too long. People typically go out and put it back into the economy quickly after getting it. We’re hoping to see those refunds pick up which should lead to an expected pop in the market. We are looking forward to the little bit of optimism that will come out of tax refunds. Higher refunds cause higher consumer spending which creates a higher GDP and hopefully a higher market. It’s got a domino effect and we hope it comes to fruition.
Bobby Norman, CFP®, AIF®
Senior Vice President
Wealth Consultant
Email Bobby Norman here
Ashley Page, JD, MBA
Senior Vice President
Wealth Consultant
Email Ashley Page here
Trey Booth, CFA®, AIF®
Senior Vice President
Wealth Consultant
Email Trey Booth here
Adam Vansant
Associate Vice President
Wealth Consultant
Email Adam Vansant 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.
Economic forecasts set forth in this presentation may not develop as predicted.
No strategy can ensure success or protect against a loss.
Stock investing involves risk including potential loss of principal.
Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.
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