What Slowdown? US Economic Data Continues to be Solid

This is Tracey Ryniec, Senior Equity Strategist, filling in for Kevin through Monday. Fingers crossed that the market gods shine down while I’m covering for him.

Stocks managed to find some green shoots yesterday even though trade worries continued to weigh on sentiment.

It helped that the economic data continues to remain strong.

The second look at Q1 GDP continued to be bullish, as it only fell to 3.1% from the previous look of 3.2%. With first quarter normally historically the weakest quarter, it’s a positive that the revisions haven’t been more severe.

GDP is backward looking, though, as we’re well into Q2 now. The Atlanta Fed is looking for 1.8% for Q2 but it had a forecast as low as 0.2% for Q1 which turned out to be too bearish.

That’s why investors should be watching other metrics that are timely, such as the weekly jobless claims data. For the week of May 25, it came in at 215,000 with a 4-week moving average of just 216,750, down 3,750.

While that’s not at the 50-year low which is around 200,000, it’s still incredibly low and hasn’t been spiking higher. The labor market remains healthy and tight which should continue to light a fire under consumer spending.

While stocks have pulled back off their all-time highs by around 5%, this is normal in this bull market. It’s the 24th time since March 2009 that the S&P 500 has done so. And they all feel pretty awful.

If you had panicked one of the other 23 times, you’d be missing the rally.

Companies are managing the trade risks, for now. That can change, of course. That’s why investors should really keep an eye on the leading indicators and other economic data for signs of a slowdown. But, for now, those signs aren’t there. The state of the US economy is strong.

With stock market weakness, it’s a good chance to stock up on your favorite companies.

Look around for those buying opportunities.

Source by Stock Strategist at Zacks Investment Research

Categories: Business, Economy, Finance

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