The 1st quarter GDP numbers were released today, and the figures were sluggish. While the financial media has been telling us for some time now that this recovery has been picking up steam, we are finding ourselves in the same familiar pattern we seem to be stuck in for the last several years. Kind of like when one of your old LPs had a scratch, and the record needle played the same part of a song over and over again…(For you millennials out there, I don’t have comparable analogy off the top of my head. Sorry!)
So after a decent end to 2014, we’re back to the old 1 or 2 Quarters that look okay, followed by 1 or 2 quarters that leave a lot to be desired. There may be another quarter lost in there somewhere, but you get the point.
The Cause?
It was a very cold and snowy winter in much of the country (just like 2013-2014), but two other factors are in the mix this time around. We had a protracted labor strike in our west coast ports hurting inventories, and a strong dollar which makes our exports more costly, and thus less purchased abroad. This, however, is somewhat offset by lower gas prices (however, early indications show that Americans are pocketing the savings from the pump instead of spending it in the economy).
So what’s next?
Rebound, slow down, or even <gulp> Recession? Where are we in the business cycle, you might ask? While it is likely this recovery has some steam to it yet, this has been the most anemic recovery since the Second World War. As I’ve stated in earlier posts, a robust regulatory climate and an increasingly complex and uncompetitive tax system in this country are some of the obstacles holding this economy back. I do believe, however, odds are we will have somewhat of a rebound for the remaining quarters of 2015. Of course, no one predicts recessions or the continuing of expansions with any ongoing success; not even the brightest economists.
What to do?
So what are we supposed to do with our 401k’s, our IRA’s and our other investments? Do we get out of the markets and watch the bulls charge, or do we stay in and watch the bears come out for a clawing attack?
Your financial planner should tell you to not try and time the market cycle (you will eventually lose that roulette game), and to rely on the financial planning you have been doing all along (you have been planning, haven’t you?)
If you’ve built a diversified portfolio based upon your long term goals and needs, you can weather the occasional storms as they breach the horizon as long as you stay focused and disciplined; and don’t worry about the GDP from one quarter to another, you’ve got more important things to do.