Stocks and the economy
The stock market has been rising slowly in 2015, up close to 1% ytd. The market is an excellent leading indicator of the economy,
The latest data show quite clearly the economy is downshifting. Consumer spending (blue line, above chart) is up only 2.8% y/y and income (red line) is also slowing down.
The market knows and is fully aware that a slower economy will bring weak profits. And stocks strive on rising profits.
Stocks will grow faster only when the economy grows faster thus bringing larger profits.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Author, Profiting in Bull and Bear Markets
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