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How Investors Can Determine an Economic Trend From a Blip

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The economy is on strong footing. 

No, it's not. The trends are negative. 

That's the debate right now on the U.S. economy. Unemployment remains at a healthy 3.7%. Consumer sentiment is elevated, although decelerating of late. Business investment is decelerating, a trend that has recently been exacerbated by uncertainty over future tariffs from both the U.S. and China. Manufacturing activity contracted this summer. As for jobs, the U.S. economy added 224,000 jobs in June, beating expectations of 140,000. But the economy added 13,000 (105,000 adjusted) in August, missing expectations of 163,000. 

For investors looking to determine if the latest jobs reading is a blip on the radar showing a positive trend or if the jobs number is representative of a negative trend, listen to a piece of advice from this investment veteran in our "Ask the Expert" series.

"When we're looking at blips on the radar versus a trend, which is a critical question because right now we're an economy that is in transition, you are going to see blips. You're going to see some ups, some downs. The way you know when it's a blip is the magnitude of the so-called blip. So the greater the deviation from the trend, the greater the possibility that it is a blip. And of course when you can confirm that it's no longer a blip and it is actually becoming the trend, that's when you get two or three of those blips and they've just transitioned into a trend."

- Chris Macke, institutional investment strategist

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