The Markets

The United States economy is not performing the way anyone thought it would. Instead of tipping into a recession last year, it crushed expectations. Gross domestic product, which is the value of all goods and services produced in the country, expanded 2.5%, after inflation, for the year.

U.S. Economic Growth

  • 1Q 2023: 2.2%
  • 2Q 2023: 2.1%
  • 3Q 2023: 4.9%
  • 4Q 2023: 3.3%

It’s interesting to note that the U.S. economy has been outperforming other developed countries’ economies. For example, GDP for the Group of Seven (G7), which includes seven countries plus the European Union, has grown 4.7%, in total, since the fourth quarter of 2019 (prior to the pandemic). G7 GDP includes – and got a boost from – U.S. economic growth.

G7 Economic Growth (Oct 2019—Sep 2023)

  • U.S.: 7.4%
  • G7: 4.7%
  • Canada: 3.5%
  • E.U.: 3.4%
  • Italy: 3.3%
  • Japan: 2.4%
  • U.K.: 1.8%
  • France: 1.8%
  • Germany: 0.3%

Here’s the really good news: Inflation continued to move lower while the economy grew last quarter. Last week, the personal consumption expenditures index reported that core inflation, which excludes food and energy prices, dropped from 3.2% to 2.9%. Headline inflation was 2.6%.

Last week, major U.S. stock indices finished higher. The yield on the benchmark 10-year U.S. Treasury finished the week in the same place it started.


Data as of 1/26/24 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 Index 1.1% 2.5% 20.5% 8.3% 13.1% 10.6%
Dow Jones Global ex-U.S. Index 1.7 -1.6 2.3 -2.8 3.1 1.8
10-year Treasury Note (yield only) 4.2 N/A 3.5 1.0 2.7 2.8
Gold (per ounce) -0.5 -2.9 4.5 2.8 9.2 4.8
Bloomberg Commodity Index 2.1 0.1 -12.1 7.1 4.3 -2.5

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.

Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.

Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

Here’s Another Tax-Advantaged Way to Save for Retirement

Many people are looking for ways to save more for retirement. An option that is often overlooked is the health savings account, or HSA. While some eligible people are using these accounts for short-term savings, most are not taking advantage of the potential long-term benefits, according to Bank of America’s 2023 Workplace Benefits Report.

Anyone who is enrolled in a qualifying high-deductible health plan (HDHP) can contribute to an HSA. It’s an attractive option because these accounts offer a triple tax advantage.

  1. Contributions are made with after-tax dollars.
  2. Any investment earnings grow tax deferred.
  3. Withdrawals taken for qualified medical expenses are tax-free.

This year, individuals can contribute up to $4,150 to an HSA, while families can contribute up to $8,300. Depending on the HSA, it may be possible to invest any money that is not used for current medical expenses.

For instance, imagine a 35-year-old saves about $2,000 in an HSA each year until retirement at age 65. They withdrew $500 a year to pay for healthcare, and invest the rest, earning 7 percent a year, on average. At retirement, the individual would have more than $150,000 in the account.

Best of all, after age 65, the money in an HSA can be withdrawn without penalty for any purpose at all. The caveat is that taxes may be owed on distributions taken for purposes unrelated to healthcare. In addition, the savings could be used to reimburse some Medicare premiums, as well as healthcare costs that are not covered by Medicare.

If you would like to learn more about HSAs, please get in touch.

Weekly Focus – Think About It

"Remember that sometimes not getting what you want is a wonderful stroke of luck."

—Tenzin Gyatso, Dalai Lama

Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

  • Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
  • Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
  • The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
  • All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
  • The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
  • The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
  • Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
  • The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
  • The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
  • International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
  • Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
  • Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
  • Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
  • Past performance does not guarantee future results. Investing involves risk, including loss of principal.
  • You cannot invest directly in an index.
  • Stock investing involves risk including loss of principal.
  • The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth may not develop as predicted and are subject to change. Investing involves risk including loss of principal.
  • The Price-to-Earning (P/E) ratio is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher P/E ratio means investors are paying more for each unit of net income, thus, the stock is more expensive compared to one with a lower P/E ratio.
  • These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
  • This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with the named broker/dealer.
  • The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
  • Consult your financial professional before making any investment decision.

Sources:

https://www.bea.gov/sites/default/files/2024-01/gdp4q23-adv.pdf

https://www.oecd.org/sdd/na/gdp-growth-third-quarter-2023-oecd.htm

https://www.bea.gov/news/2024/personal-income-and-outlays-december-2023

https://www.barrons.com/market-data (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/01-29-24_Fidelity_HSA%20Data_9.pdf)

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202401

https://business.bofa.com/content/dam/flagship/workplace-benefits/ID22-0888/2023-WBR.pdf

https://www.investopedia.com/articles/personal-finance/091615/how-use-your-hsa-retirement.asp

https://www.irs.gov/pub/irs-drop/rp-23-23.pdf

https://fidelity-hsacalculator.ssnc.cloud/summary (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/01-29-24_Barrons_Data_4.pdf)

https://www.travelandleisure.com/travel-tips/celebrity-travel/dalai-lama-quotes-travel-inspiration

ADV & Investment Objectives: Please contact The Dowling Group if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Our current disclosure statement is set forth on Part II of Form ADV and is available for your review upon request.