What should investors think of the current economic climate? The below article from The Wall Street Journal sums it up as “It’s probably fine, but…”
The U.S. economy has no doubt hit a soft patch this year, with weak retail sales growth and industrial production figures the latest reports to raise concerns. However, according to the author, the key for investors will be to determine how much of this weakness “should be ascribed to temporary causes and how much comes from longer-lasting factors.” The author points to extreme cold weather in January, the government shutdown and the sharp drop in the stock market in December as all likely producing a temporary drag on the economy. This would not be overly concerning, as all of these factors have more or less subsided. The real concern is from longer-lasting ones, such as fading fiscal stimulus, weakness overseas and tariffs. These factors likely won’t be subsiding anytime soon and could bring about more pain down the road.
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