The Weekly Update 8/26/2022

Conflicting Data Points Continue!!

The Philadelphia Federal Reserve Business Outlook Report below came in surprisingly positive.  As you can see in the news report dated 8-8-2022 below, expectations were for a contraction in the business outlook of -5.0 and it came in at +6.2.

Also notice the second bullet point quantifying a rather steep drop in prices paid, i.e., a reduced inflation level on cost inputs for products in production.

Both positive.

And then our Sign #3 of the Seven Signs of a Changing Economy™, The Conference Board’s Leading Economic Index (LEI) suggests a continued slow down in our economy.

As you know, the LEI is our peek around the economic corner six to nine months in the future, so February-May 2023.  Last month’s edition of The Seven Signs of a Changing Economy™ did have LEI reduced to negative for our future economy.

Notice in the legend that The Conference Board has pasted in a recession warning signal.

The confusion in these two pieces is that both have been historically accurate indicators of future economic growth.

They can’t both be correct.  Of course, one could change to mirror the other, but not overnight.  These are just two conflicting signals.  There are many more.

In the past, when I have seen these types of conflicting data points, they were followed by volatility in the capital market.  As we pass through the summer and through Labor Day, the commonly accepted “end of summer”, it is likely we will see more ups and downs.

In that volatility, we could see opportunities to commit some of our cash positions.  We may, or may not, be “out of the woods”, but either way we will continue to be thoughtful about preserving the assets entrusted to our oversight as well as investing for your bigger financial future.

I am interested in your thoughts, comments, and questions!

Respectfully,

Brittany N. Jarocki, CFP®

CERTIFIED FINANCIAL PLANNER™ Professional

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