By Mosaic Financial Partners The U.S. economy appears to have regained traction during the second quarter of 2014. Gross Domestic Product, the broadest measure of goods and services produced in the U.S., grew at an annual rate of 4.6% in the second quarter. This was a very strong rebound from the first quarter when real GDP declined a sharp 2.1% due to the bad weather and reduced consumer spending. At the same time, it’s worth noting how resilient the stock market has been over the last five years. We are in the fourth-longest bull market since 1928.
The second quarter's 4.6% growth in real GDP was broad-based and reflected growth in personal consumption, private inventory investment, exports, residential and nonresidential fixed investment, as well as growth in local government spending. All of these should bode well for stocks. These gains were partially offset by an increase in imports, which negatively impacts GDP, and a 0.9% decline in federal government expenditures.
The latest U.S. job numbers made a strong statement that the rebound in the job market continues. Over the last three months, payroll gains have averaged 224,000, which pushed unemployment rates down to 5.9 percent - its lowest level in six years. Over the last six years, consumers have made significant improvements in their overall debt levels, which, when added to continuing job growth should help increase consumer spending and demand for housing. The number of people receiving unemployment benefits has fallen steadily—to 2.38 million in the week ended Sept. 27. This is the lowest level since May 2006. For many workers, this reduction means formerly unemployed works have found jobs. However, another reason for the drop in unemployment benefits is that many of the long-term unemployed are no longer eligible (with jobless aid only lasting for 26 weeks in most states).