March 2016 Educational Economic Update

Knoxville, TN CFP(R), Wealth Manager, and Financial Advisor Justin Goodbread brings you this March 2016 Education Economic Update. Hello Guys, this is Justin Goodbread, Certified Financial Planner with Heritage Investors bringing you a March 2016 educational economic update. In this video, we’ll talk about some of the economic headlines that influenced markets in the last month, and give you some insight into what they could mean for you as an investor. Please stay tuned at the end for a required disclosure statement. After a rocky January for stocks, February didn’t offer investors any respite.Volatility was still the name of the game. However, we did get some positive news. Let’s talk about some of the month’s major headlines. If you have been watching the news, you’ve probably heard a lot of talk about a possible recession ahead. Here is the BIG question‐‐‐ Is a recession coming? Some economists are worried about a U.S. recession because of issues like low oil and commodity prices, emerging market problems in countries like China, and fears that central banks are out of tools to fight economic trouble. * These fears are not baseless. However, they don’t necessarily spell recession. There are also a lot of positives to consider. One indicator that argues against a coming U.S. recession is the labor market. The January jobs report showed that the economy gained 151,000 jobs that month.* The gains pushed the headline unemployment rate down to 4.9%, the lowest it has been since February 2008.* Another positive is that wages are growing and Americans are continuing to spend money, which is a good sign for the economy.*Here is the point! we don’t know if a recession is coming and neither does anyone else, regardless of what they say on TV. Recessions don’t just happen for no reason, but we are taking concerns seriously and watching fundamentals carefully. Plummeting crude oil prices have had a lot to do with negative sentiment in recent months. Crude oil prices are so low because the world is awash in it and the supply glut, combined with slowing demand from China, is pushing down prices. Investors worry that persistently low prices mean that the global economic growth situation is growing worse. Low prices also cut into energy company profits as well as those of companies with stakes in the energy industry. With 87 percent of S&P 500 companies reporting in, we see that overall S&P 500 earnings were down 3.6 percent in the fourth quarter of 2015. However, if we remove the energy sector from analysis, earnings actually grew a healthy 2.5 percent. Companies that mostly depended on U.S. demand did even better.* The overall economic picture wasn’t as bad as expected last quarter; the second estimate of Q4 economic growth showed that Gross Domestic Product grew 1 percent, not the 0.7 percent originally estimated.6 While economic growth decelerated in the last three months of the year, it didn’t slow down as much as economists thought. Responding to concerns about economic growth, the Federal Reserve declined to raise interest rates again in its January meeting, keeping them low to help boost investor confidence. While the Open Market Committee will meet again in March, most economists don’t think the Fed will hike rates again until June at the earliest.* Ok Justin, What is the Bottom line: 2016 has been a rocky road for investors and the volatility is likely to last for a while. While corrections and uncertainty aren’t easy, let’s remember that they are coming after years of solid equity growth. We are keeping a close eye on fundamentals and helping our clients make informed decisions based on the latest research. If you have concerns about your personal financial situation in the current market, please give us a call at 865‐690‐ 1155. We would be happy to speak with you. If you like the information in this video, please connect with us socially. We are on Facebook, Twitter, LinkedIn, Instagram, and our newest addition our Blog. Which by the way is getting tons of hits because of the regular posting and relevant information. Please remember that nothing we talk about here is a recommendation. If you would like to discuss your personal financial situation, please give us a call at 865‐690‐1155. Once again, this is Justin Goodbread, Certified Financial Planner with Heritage Investors providing you with this educational economic update. www.heritageinvestor.com http://fortune.com/2016/02/11/recession/ http://www.bls.gov/news.release/empsit.nr0.htm http://fortune.com/2016/02/05/full‐employment/ http://www.reuters.com/article/us‐usa‐economy‐idUSKCN0VL1CT http://www.factset.com/websitefiles/PDFs/earningsinsight/earningsinsight_2.19.16 http://www.foxbusiness.com/markets/2016/02/26/u‐s‐economy‐grows‐at‐1‐pace‐in‐4q.html http://projects.wsj.com/econforecast/#qa=20160201001