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Third Quarter GDP Report 2019

Gross Domestic Product (GDP) grew by 1.9% in the third quarter, which came in above expectations of 1.6%. Many of the same characteristics carried over from the Q2 report such as growth in consumer spending and continued weakness in business investment. One notable change was a surprise return to growth in residential housing investment. As was the case in Q2, consumer spending was the largest contributor to GDP growth in the quarter, contributing 1.9% to the aggregate growth figure. However, consumer spending growth declined by nearly a third from Q2 to Q3 from 4.6% to 2.9%, which makes some sense given all of the current headlines that may be weighing on consumer confidence. As alluded to earlier, the business investment contraction worsened to -3.0% from -1.0% in Q3 from Q2 led by continued slowdowns in equipment and structure investment. This continued worsening in business investment is, to some degree, expected given the current economic and geopolitical uncertainties that business managers are up against. As discouraging as business investment was, residential housing growth made a great effort to bring some positivity to the gross private domestic investment segment. Residential housing delivered its second quarter of growth in the last 10 quarters, which is an encouraging sign that the current Fed rate cutting program is enticing consumers to get back in the housing market. Net exports detracted 0.08% from GDP growth as exports grew 0.7% in the quarter compared to 1.2% growth in imports, and although the dollar has marginally weakened recently, it still is a headwind to net exports. Lastly, government spending grew 2.0% and contributed 0.4% to GDP growth, led by federal government spending growth of 3.4%. Consistent with many other recent economic data releases, the GDP report showed that the U.S. economy is growing, albeit at a slower rate, and although consumer spending growth slowed, the consumer is who we will continue to look for growth.

Chart All Time High in Stock Market Amid Increased Volatility

Amid a myriad of negative political headlines and signs that economic growth is slowing, the stock market has proven very resilient and once again reached new all-time highs. The chart above shows a few key events that have taken place over the last year, including last year’s sharp pullback and the Fed stepping in and once again cutting short-term interest rates. While volatility has obviously been elevated, the markets have had a very good year on their way to a new record high. This can be partially attributed to the Fed’s action and the fact that while growth is slowing, it is still positive. As we move forward, new economic data releases will show whether the headline risks are feeding into the hard-economic data, or if political uncertainty is not enough to put an end to the longest economic expansion on record.

For those of you who were unable to join us for Allegiant’s Quarterly Market Update held on October 24th at Selby Gardens, we wanted to provide a recap of the night’s events.

The first portion of our presentation was an economic and market update provided by President and Chief Investment Officer, Ben Jones, CFP®, AIF® and Portfolio Manager, Luke Nicholas, CFA, CFP®. The team started off the night by acknowledging the unprecedented level of geopolitical uncertainty that is facing markets today. From the ongoing trade war between the U.S and China to the U.K. teetering on the edge of a “hard” Brexit and the ongoing tension in the Middle East, it is enough to make your head spin. While this political uncertainty is something to be cognizant of, much of it is just noise. During times like this, the most appropriate thing for investors to do is take a step back and examine what really matters, the underlying economy. 

Survey Data Pointing Towards a Weakening Employment Environment Chart

Highlighted by record low unemployment and the recent return of modest wage growth, the U.S. employment environment has been a strong point for the domestic economy throughout the current economic expansion. However, as indicated by the gold line in the chart above, the rate of job growth has been slowing for most of 2019. Slowing job growth 10 years into an economic expansion makes sense, given that there is minimal slack left in the jobs market. Nonetheless, slowing job growth is a concern as any hit to the American consumer could threaten an already shaky economic growth picture. Survey data (black line) confirms that business managers are experiencing increasing difficulty with finding qualified labor as well as having to forgo new hiring rounds due to macroeconomic headwinds, namely the ongoing trade war with China. We expect that employment growth will continue to be weighed down as long as major macro level concerns go unresolved.

APA Kossoff 3x4HI RGBIn my letter that I wrote last December, I apparently did a poor job of communicating my transition from President to Chairman.  So, now, after many kind inquiries from all of you about how my “retirement” was going, let me say thank you, I love all the care and concern, but (fortunately) I am not retired.  The work we are doing to build and maintain a world-class business by helping clients attain their financial success is still so incredibly exciting and compelling to me that while this is my 23rd year with Allegiant, my 33rd year in the industry, and I’m not close to being done. 

If you have found yourself in the difficult position of researching divorce in the last few years, you may have come across the term “collaborative divorce.” For many people, separating from a spouse can be one of the most painful experiences of their lives. As such, it seems far-fetched that the process can be anything but contentious. However, collaborative divorce often provides a path for an amicable separation. Before diving into the details of collaborative divorce, let’s first review the other ways that a couple can divorce. 

Every month The Institute for Supply Management (ISM) releases a comprehensive Report On Business consisting of two separate reports, the Manufacturing ISM Report and the Non-Manufacturing ISM Report. The manufacturing report includes the Purchasing Managers’ Index (PMI); the non-manufacturing report includes the Non-Manufacturing Index (NMI). These indices represent a collection of survey data from purchasing executives throughout various industries regarding changes in business metrics over the previous month.

Month after month, year after year, the economy keeps chugging along. The longest economic expansion in U.S. history continues to astound many doubters. There are certainly reasons to doubt this expansion. On any given day there is an abundance of dissenters avowing why the current state of affairs is really different than what our experience is telling us. Up until now it has been hard to give much credit to the ever-present doubters. But, one day the doubters will be right. Even a blind squirrel finds a nut sometimes.

You may remember the noise surrounding the settlement for $125 per victim promised by Equifax following the massive 2017 data breach. 

Since that news, the filing process has changed. In the beginning of September 2019, Equifax sent an email to those who have already filed the $125 claim based on the grounds that they already are subscribed to a credit monitoring service. Equifax now requires that anyone who has filed a claim will have to prove they actually have credit monitoring in order to receive the promised $125. 

A side note: the email sent by Equifax looks like spam and may be captured in your junk folder, so you may need to search for their correspondence. The legitimate correspondence comes from This email address is being protected from spambots. You need JavaScript enabled to view it. with the title, “Your Equifax Claim: You Must Act by October 15, 2019 or Your Claim for Alternative Compensation Will Be Denied.” 

APA Vorndran 3x4HI RGBAs the growing need for financial education continues to be recognized, Allegiant Private Advisors has pioneered multiple programs designed to increase awareness and knowledge about finance and money management within the Sarasota region. Allegiant Paraplanner KJ Vorndran, CFP®, CRPC® and a Master of Science, Personal Financial Planning candidate, has been one of our key leaders involved in presenting a financial literacy program for the Sarasota Young Professional Group (YPG), part of the Greater Sarasota Chamber of Commerce, and launching Allegiant’s Young Professional Mentorship Program. Now, she’s lending her professional knowledge and talents to the YPG membership in an additional way. 

On October 1, 2019, KJ will begin her volunteer service as Finance Chair on the Young Professionals Group Board of Directors.