With Stocks Near All-Time High, Personal Income And Employment Data Are Released
Published Thursday, August 3, 2017 at: 7:00 AM EDT
Real disposable personal income grew 2.8% in the 12 months ended June 30. That's the same rate as in the last economic expansion and is enough to fuel continued economic growth.
Real disposable personal income is a key figure in driving the economy because it is the key determinant of consumer spending and 70% of U.S. growth comes from consumer spending.
Meanwhile, the official unemployment rate declined to 4.3%. That's lower than the bottom of 4.4% in the rate of joblessness achieved in the last economic expansion in spring 2007.
Not since May 2001 has the unemployment rate been this low, and that was at the end of the longest expansion in modern U.S. history.
In addition, the economy has continued to create new jobs - 208,000 of them in June - which was above expectations.
New job creation and a decline in unemployment has been stretched out because the severity of The Great Recession caused more job losses than in past recessions.
The economy cannot keep producing new jobs the way it has in recent years because the U.S. is at full employment, or near it. When companies find that their new positions cannot be filled or take much longer to be filled, they continue to operate but with open positions. However, companies eventually are likely to stop creating new jobs when they cannot fill their current openings. This is likely to happen in the months ahead.
The Dow Jones Industrial Average closed above the 22,000 mark for the first time ever on Wednesday, August 2. The Standard & Poor's 500 index has repeatedly broken its all-time high for months and it closed the week fractionally lower than its all-time high.
At 98 months, the current expansion and bull market is the third-longest in modern U.S. history, and the good times could surpass the longest-ever U.S. expansion, the 120-month-long boom that spanned the entire decade of the 1990s and ended with the tech bubble of early 2000.
A bad surprise could turn sentiment abruptly, and a 10% or 15% price drop is possible any time. However, earnings on the Standard & Poor's are expected by Wall Street analysts to rise by 18% in 2017 and 12% in 2018 - far stronger than the long-term annual average rate of earnings growth of 7%, and the latest economic data released this past week bolstered expectations for continued economic growth, indicates, which drives corporate earnings, so the bull market could also go on for years.
Combined with the one-two punch of tax and financial planning, adhering to a discipline of broad diversification and strategic asset allocation in a low-cost core portfolio that is periodically rebalanced is a smart regimen to prepare for the best of times and worst.
We are independent financial professionals, communicating at a frequency attuned to you.
Get financial wisdom here anytime from your Smartphone, by subscribing to our e-mail newsletter.
This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
- Strong Jobs Report Caps A Week For The Record Books
- Why Stocks Rose Friday Despite A Rise In Inflation In April
- Weekly Investor Update
- The Confluence Of Bad News For Recent Retirees And Those About To Retire
- Good And Bad News This Week For Investors
- Getting There: The Economic Balancing Act Progressed In March
- Stocks Gained Friday But Closed Fractionally Lower For The Week
- Good News On Inflation But A Recession May Be Hard To Avoid
- Analysis: The First Data Since The Banking Crisis Erupted In March
- Stocks Gained 7% First Quarter And Other Good Financial News
- Despite Bank Fears And A Fed Hike, Stocks Climbed For The Week
- Bank Panic And Strong 1Q '23 Economic Growth
- Mixed Economic Signals And A Bank Failure
- Service Sector Remained Strong In February, Soothing Investors For Now
- Inflation Rose In January, Indicating Tight Monetary Policy May Continue Into 2024
- Amid Divergent Data, Here's What To Know
- Optimistic Again, Will A Fed Algorithm Be Right Again?
- The Bipolar Economy Of 2023
- On Wednesday, We’ll Know If The Federal Reserve Will End Inflation By Causing A Recession
- Technology Drove S&P 500 1.9% Higher Friday, But Look At Tech's Terrible 2022 Loss
- Here What To Know To Invest Wisely
- Prudence Requires Positioning Portfolios For An Economic Expansion