As corporate earnings dribble in and the results of the Federal Reserve’s next policy meeting are more than a week away, it’s a good time for a reality check across a few key areas:
Economy: Fed Chairman Jerome Powell recently delivered a speech in Paris, where he said that U.S. economic conditions should “remain solid,” but outstanding issues like trade wars, Brexit, and the U.S. debt ceiling have caused “uncertainties” over the outlook.
Reality Check: June data on Employment, Retail Sales and Industrial Production showed that job growth continues, consumers are spending briskly across a variety of categories (though not in department stores), and manufacturing activity bounced back. Grant Thornton Chief Economist Diane Swonk believes that Q2 real GDP growth, which will be released on July 26th, “could come in at 2 percent, a slowdown from the first quarter [3.1 percent], but still solid growth for the first half of the year.”
Investors: As U.S. stock indexes hover near all-time highs, a new survey points to a disturbing trend among investors: an alarming sense of confidence in future returns. According to investment bank Natixis, respondents said they expect to earn 10.9 percent above the inflation rate over the long term, up by more than a percentage point from a year ago.
Reality Check: U.S. financial advisors think an annual return of 6.3 percent is realistic and separately, fund giant Vanguard recently projected 10-year returns for a 60 percent equity and 40 percent fixed income portfolio of just 4 to 4.5 percent.
Wealth: A million bucks may not be what it once was, but according to a new survey from Ameriprise Financial, just 13 percent of Americans with at least $1 million investable assets (not including equity in homes or collectibles) feel wealthy.
Reality Check: Presumably these “middle and upper middle class” folks are comparing themselves with their much richer friends, because according to the most recent Federal Reserve Survey of Consumer Finances, the median net worth of the average U.S. household is $97,300, and that figure includes home equity.