The Markets

A recent Harris poll, conducted on behalf of The Guardian newspaper, found that there is some confusion about the state of the American economy and U.S. stock market performance. A significant proportion of the Americans who participated think the economy and the stock market are in rough shape. Here are a few of the misperceptions uncovered by the poll:

  • Misperception No. 1: The United States is in a recession, according to 56% of poll respondents.

    Reality: The U.S. is not in a recession. The economy has been expanding, not shrinking. Here are the statistics for recent U.S. economic growth (after adjusting for inflation):
      2020: -3.5% (pandemic year)
      2021: +5.8%
      2022 +1.9%
      2023 +2.5%
      2024: +1.6% (first quarter 2024)

  • Misperception No. 2: The Standard & Poor’s (S&P) 500 Index is down for the year, according to 49% of poll respondents.

    Reality: The S&P 500 was up 11.2%, year to date, through the end of last week. In 2024, the Index has charted 24 all-time highs, reported Jan-Patrick Barnert, Alexandra Semenova, Geoffrey Morgan and Michael Msika of Bloomberg.

  • Misperception No. 3: Inflation has been rising, according to 72% of poll respondents.

    Reality: Inflation has been trending lower. In April, inflation was 3.4% over the previous 12 months. While that rate is higher than the Fed’s target rate, it is far lower than inflation in June 2022 when it peaked at 9.1%.

    The confusion may be related to the fact that prices remain higher than they once were. There was some positive news on that front, last week. Several major retailers announced they are lowering prices on groceries and other items, reported Jaclyn Peiser of The Washington Post.


  • Misperception No. 4: Unemployment is near a 50-year high, according to 49% of poll respondents.

    Reality: Unemployment is near a 50-year low. The average U.S. unemployment rate from 1947 through 2023 was 5.7%. In recent years, the unemployment rate has been:
      2020: 8.1% (Pandemic year)
      2021: 5.3%
      2022: 3.6%
      2023: 3.6%
      2024: 3.9% (April 2024, year over year)

Major U.S. stock indices finished the week mixed. The Nasdaq Composite Index finished the week higher, while the S&P 500 Index was flat for the week, and the Dow Jones Industrial Average lost ground. Yields on most maturities of U.S. Treasuries rose over the week.


Data as of 5/24/24 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 Index 0.03% 11.2% 29% 8.4% 13.2% 10.7%
Dow Jones Global ex-U.S. Index -1.1 5.2 12.8 -1.8 4.3 1.8
10-year Treasury Note (yield only) 4.5 N/A 3.7 1.6 2.3 2.5
Gold (per ounce) -2.5 12.7 20.3 7.6 12.8 6.3
Bloomberg Commodity Index -0.7 6.5 4.4 4.7 5.9 -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.

Looking for a Graduation Gift?

Graduation season is well underway. If you’re looking for a gift for a high school or college graduate, consider giving one or more shares of appreciated stock. This is usually done by transferring shares from your account to the recipient’s account.

There can be significant benefits to gifting an appreciated asset, including:

  • Realizing a tax advantage. When people gift shares of appreciated stock, they may realize a tax advantage. Typically, when shares that have increased in value are gifted to another person, the gift giver does not owe capital gains tax on the shares.
  • Allowing the asset to grow over time. The gift recipient may owe tax when they sell the shares, depending on the sale price and the recipient’s tax bracket. If the shares remain invested, though, they have an opportunity to grow over time.
  • Creating a teaching opportunity. When gifting shares, share the story of the stock with the recipient. Why did you buy it? How much has it appreciated? Do you think the recipient should keep it or sell it? Gifting shares creates an opportunity to share knowledge and increase financial literacy.

The government limits the amount of money that can be gifted to an individual without paying a gift tax. The annual gift tax exclusion is $18,000 per recipient in 2024. In general, a person can give up to $18,000 per recipient without having to pay a tax on the gift. Appreciated shares can also make great birthday and holiday gifts.

There can be complexities when gifting an appreciated asset. If you would like to explore the idea, give us a call.

Weekly Focus – Think About It

Instructions for living a life:
Pay attention.
Be astonished.
Tell about it.

—from ‘Sometimes’ by Mary Oliver

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.theguardian.com/us-news/article/2024/may/22/poll-economy-recession-biden (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_The%20Guardian_Majority%20of%20Americans%20Wrongly%20Believe%20US%20is%20In%20Recession_1.pdf)

https://www.bea.gov/sites/default/files/2021-01/gdp4q20_adv.pdf [Table 1] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_BEA_Gross%20Domestic%20Product%204th%20Quarter%20and%20Year%202020_2.pdf)

https://www.bea.gov/sites/default/files/2024-04/gdp1q24-adv.pdf [Table 1] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_BEA_Gross%20Domestic%20Product%201st%20Quarter%202024_3.pdf)

https://www.bloomberg.com/news/articles/2024-05-18/tokyo-to-new-york-stock-markets-are-on-a-record-hitting-spree-around-the-world (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_Bloomberg_From%20Tokyo%20to%20New%20York%20Stock%20Markets%20Are%20On%20a%20Spree_4.pdf)

https://www.bls.gov/regions/mid-atlantic/data/consumerpriceindexhistorical_us_table.htm

https://www.washingtonpost.com/business/2024/05/24/grocery-prices-falling/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_The%20Washington%20Post_Grocers%20Are%20Finally%20Lowering%20Prices%20as%20Consumers%20Pull%20Back_6.pdf)

https://data.bls.gov/timeseries/LNU04000000?periods=Annual+Data&periods_option=specific_periods&years_option=all_years [Average is in pdf] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/05-27-24_BLS_Labor%20Force%20Statistics%20from%20the%20Current%20Population%20Survey_7.pdf)

https://www.bls.gov/news.release/pdf/empsit.pdf

https://www.schwab.com/learn/story/stock-market-update-close

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202405

https://www.investopedia.com/ask/answers/07/giftofstock.asp

https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes [How many annual exclusions are available?]

https://readalittlepoetry.com/2014/09/10/sometimes-by-mary-oliver/

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.