Finally
By Tom Richmond, Co-Head of Taxable SMA Strategies, Senior Portfolio Manager
As we guessed (hoped) in our update last quarter, the third quarter finally delivered some action on several fronts worthy of discussion and analysis. The U.S. economy continued to perform reasonably well, as well, as third quarter Gross Domestic Product growth in currently estimated to come in, yet again, solidly above 2% in real (inflation adjusted) terms. Inflation continued to generally behave, and would essentially be back to the Federal Reserve Open Market Committee’s (FOMC’s) stated target of around 2% were it not for stubbornly elevated housing costs (see chart below). The macroeconomic piece that was bit concerning was the employment picture in the U.S.; monthly job creation numbers stagnated, and the prior year’s data was revised sharply downward, even though the rate of unemployment remained historically low and first-time claims for jobless benefits were rangebound. Data early in the quarter was such that the FOMC declined to cut rates in the late July before seeing more inflation and employment data. See it they did.
