April 1st through June 30th, 2015
We learned today that the US economy grew by just 2.3% in the second quarter of 2015. The growth rate came in lower than expected; economists’ consensus had targeted a 2.7% rate. While it is positive growth, it is the sixth year of a sluggish expansion, and the GDP has averaged just 1.5% for the first half of 2015 versus 1.9% for the same period last year. So while the growth is positive, the trend is lower year over year.
There were a variety of factors that contributed to the sluggish growth for the year so far, including a harsh winter, a strong dollar and a prolonged labor dispute on the west coast ports. However, these factors were only a small headwind for what has been an below average recovery since 2009.
While April & May were relatively quiet, June saw increasing market volatility due to concerns about Greek debt repayments and domestically by increasing talk of rising rates towards the end of the year. On Wednesday, the Fed indicated it is still holding out the possibility of a rate rise in 2015. Most economists have also lowered their growth projections for the remainder of the year.
During the quarter, Small company stocks led the way domestically with a 0.4% increase while US real estate dropped sharply. Internationally, small stocks were up over 4%, while Global short to intermediate term bonds were down slightly[1]. All told, the first 6 months of 2015 have been anemic for most asset classes around the globe.
[1] Figures above based on Russell 2000 index, Dow Jones US select REIT index, MSCI World Ex USA Small Index (net div.) & Citi WGBI 1-5 Yr. Hdg U.S.D respectively