Slowing earnings growth has been with us for a while, and markets have largely recovered when companies beat expectations, as they do consistently. Concerns about China aren’t much worse than those about the collapse of the eurozone, especially if you factor in the Russian occupation of Ukraine. U.S. economic growth has bounced up and down, with periods of slower growth, but has continued at a pretty steady pace.
Although growth has been slower and the markets more volatile than we might like, we haven't moved into recession or entered a bear market. Despite some very real concerns, there hasn’t been a new crisis here in the U.S.
The more things change . . .
Based on the themes of last year, 2016 so far is more of the same. Unless something changes, expect continued employment and spending growth, but at a slow pace. Expect market volatility, but (absent more external shocks) not a bear market. Expect a fairly normal year, with the economy continuing to muddle along and markets trying to process what’s happening in the rest of the world.
It could be better, but it could also be a good deal worse.
Brad McMillan is the chief investment officer at Commonwealth Financial Network, the nation’s largest privately held independent broker/dealer-RIA. He is the primary spokesperson for Commonwealth’s investment divisions. This post originally appeared on The Independent Market Observer, a daily blog authored by Brad McMillan.