The U.S. economy muddles on, neither too hot nor too cold, but no Goldilocks either. The market continues its ascent, barely, with the economy growing about the same as it did under President Obama. Gross Domestic Product growth inches up toward 2%, meager by any measure, and not the 3-4% promised by candidate Trump. The ISM Purchasing Managers Index of Manufacturing, a key indicator of growth, grew to 57.8% in June, a 2.9% increase over May and its highest level in three years. The PMI services index increased for the 90th consecutive month, to 57.4%, a 0.5% increase over May’s level. The recent jobs report was positive, up 3.7% in the manufacturing sector over May, but jobs growth overall remains at about the level where it was during the Obama administration.

The new President promised accelerated GDP growth through infrastructure spending and reduced regulation. Some of that has occurred, and we have seen a positive impact on bank stocks. Still, we have not seen the robust growth that the market was expecting. Now, we have an expectation of higher interest rates and some tightening of monetary supply. What can we expect from the markets as the recovery looks ever longer in the tooth?


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