A Little Déjà Vu?

As we undertook our year end file cleaning, which involved re-reading many of our old reports to all of you, we were struck by how cyclical some of the economic news really is.  So we thought it might be interesting and fun to re-share some of the economic trends we have captured through the years in our client reports and compare to the more recent ones. 

Spoiler alert, if you think we learned anything potentially useful about future economic trends through this exercise, you would be wrong! 

January 2019

There’s no shortage of news on the economic or political fronts as 2018 comes to an end.  We are still seeing strong economic growth. Concerns about trade and tariffs, particularly with China, could dampen the growth especially if they escalate into a trade war.  The geopolitics of North Korea, Iran, and Russia also continue to dominate the international headlines. The one clear outcome is that the electorate is heavily divided, and Congress reflects that division.  We can be hopeful that a spirit of bipartisanship or cooperation will break out in the new Congress, but at this point, it seems unlikely. 

July 2017

Healthcare, tax reform, infrastructure and immigration reform are all priorities of the young administration but progress on all of them has been slow.  The day to day tussle between policy and politics has accelerated and will likely continue to impede progress on any issue that requires bipartisan action.

January 2014

The international front continues to be very volatile, both economically and geo-politically.  There is a hint of progress in Syria and some positive rhetoric coming from Iran, but it’s obviously too soon to tell if any real progress is possible. Hard to believe that the atmosphere in Washington could have gotten worse in the last month of the year, but that seems to have happened.   It certainly doesn’t bode well for an agreement on anything, much less the very difficult decisions that have to be made.  The volatile stock market has continued as the weather has cooled.

April 2012

The stock market has staged a terrific recovery in the last several months as economic news has improved. The stalemate in Washington has only gotten worse in the last couple of months as both sides are dug in to their ideological positions and unwilling to compromise or cooperate in an election year.  The race for the White House has gotten increasingly nasty.

July 2009

The stock market completed its sixth consecutive quarterly decline, although March was the best month in more than ten years.  Investors saw both a bear market and a bull market (declines and increases of more than 20%), occur during the first quarter of 2009.     

April 2007

March storminess arrived a few days early for the stock market as stocks had their worst day since markets reopened following the September 11th terrorist attacks.  It’s worth noting that stocks have been on an almost straight path upward since last summer and even March’s declines set the market back only to December’s levels.  Of course, the real question is what happens from here. Nevertheless, corporate profits remain strong, oil prices are much lower than predicted just a few months ago, and consumers are continuing to spend money.   Early hopes of cooperation and collegiality in Washington have faded quickly as debate over the war in Iraq has escalated along with the conflict. There are no fewer than a dozen announced and soon-to-announce Presidential contenders, so no shortage of political opinions on subjects ranging from tax cuts to national health care. 

July 2005

The summer doldrums have taken over the stock market with stock prices unable to make a significant move in either direction.  Corporate earnings and the economy remain strong, but oil prices, rising interest rates, and healthcare costs are dampening optimism for a summer rally. Volatility has returned to the stock market led by wide swings in oil prices…. Some very interesting new issues on the political front.  With the  imminent nomination  of a new Supreme Court Justice, the discussion of the  role of government in citizens’ private lives and of course the continued partisan bickering is likely to intensify.  No real progress on the issues facing our country -  social security, healthcare costs,  and the deficit.     

April 2003

Uncertainty reigns as the war with Iraq has begun and the stock market along with the rest of the world watches every development on TV.   War news and war rumors, and they are hard to distinguish from each other, are driving the emotions of all of us and whipsawing the market. Even the Federal Reserve has admitted that conditions are far too cloudy to predict how the war will impact the economy and the stock market. The economy has slowed down since late last year; obviously it is very difficult to discern to what degree the slowdown has been brought about by the Iraq situation although clearly the two are connected.  Corporate earnings are growing but not at the rapid pace that is usually associated with an economic recovery.

April 2001

There’s been no shortage of concerns for investors this quarter.  The very steep declines in the technology sector that we saw last year have now spread to virtually all areas of the market, at least to some degree. The declines so far in 2001 have been due largely to earnings disappointments by companies in every industry.. Despite lower earnings and falling consumer confidence, all is not gloomy on the economic front.  The Fed is lowering interest rates aggressively, not to boost the stock market, but to keep the economy growing at a reasonable pace.

October 1999

Volatility in the market has continued this quarter due largely to concerns about future inflation and rising interest rates.  The market has become very reactive to minute changes in any  price or productivity statistic which might signal too strong growth, increasing prices, or a weakening dollar.  None of those events have actually occurred in the economy, but the fear of them occurring in the near future has led the market on a roller coaster ride.  Adding to the market’s volatility are the two recent Fed interest rate increases. Although the two increases were widely expected, there is now renewed concern that the Fed may act again this year if inflationary signs are evident. 

 April 1998

The story for the quarter has been the record setting pace of the stock market; certainly an about face from late last year when 1998 projections were looking pretty dismal!  For the first time in several years, the technology and small cap sectors have outpaced the performance of the Blue Chips. Economic indicators are not as yet showing the predicted growth slowdown. It appears likely that if the economy continues to grow at the pace set in early 1998, the Fed will seriously consider raising interest rates in anticipation of  increased inflation.

Feel better?  Thought not.