Economic Outlook

U.S. Growth Benign As Global Risks Weigh

The U.S. growth story continues to improve, albeit gradually.

In recent years, U.S. growth has approximated 2%. During that period, tight fiscal policy (i.e., the government’s progress in reducing its deficit by cutting spending and increasing its revenue) detracted more than 1% from that growth. That impact now seems to be waning. Further, capital investment may be gaining strength. Forecasters, us among them, feel that growth could now gravitate toward 3%, which robust job growth and other indicators seem to confirm.

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Equity Portfolios

Stock Prices Rise Further, But Fourth Quarter Starts Roughly

Reading this in the fourth quarter may trigger a raised eyebrow, the result of early October volatility, but stocks did quite well this year, through September. More importantly to long-term investors, on a more relevant three-year timeframe, large U.S. stocks returned 86% in the period (S&P 500 total return).

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Fixed Income Portfolios

Uncertainty Leads Most Bond Markets Higher

Fixed income has outperformed the equity market so far this year. At the time of this writing, all fixed-income categories are in positive territory and some sectors, including longer-term U.S. treasuries and corporate bonds and emerging-market bonds gained anywhere between 6.5% to 9.5%. We believe that a flight-to-safety effect is playing a major role. One of our associates put it well: “…Europe slowing, Russian aggression and resulting sanctions, China slowing and social unrest. These weaknesses plus other BRIC weakness, ISIS and Ebola…it’s just too much uncertainty at one time.”

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