So far, the economy is doing better than expected and the markets seem to expect a soft landing. What are we to make of this current market amid potential regime shifts in the economy? In the latest edition of LPL Street View, Dr. Jeffrey Roach, Chief Economist at LPL Financial, addresses key takeaways for investors as they prep for the rest of this year. 

The first item to discuss is the dynamics within consumer spending. The pandemic accelerated the shift toward e-commerce and promotions such as Amazon Prime days, likely added to that boost. And in July, online shopping rose 1.4% month over month for the second consecutive month, the fastest monthly pace of sales since December. Annual growth rates for non-store retailers showed consumers healthy appetite for online shopping compared to general merchandise stores.  
 
This is an economy where businesses need to carefully manage inventory and head count as consumers gravitate toward the non-brick and mortar shopping experience. Investors will likely reward those retailers most gifted to serve this post pandemic consumer. The growth of credit card debt accelerated into the recession of 2001 and 2008. So the increasing rate of card debt now could be a harbinger of things to come. When an economy is slowing and going into recession, consumer spending slows and card balances often grow to offset factors such as slowing real wage growth. The increase in card balances foreshadows a weakening consumer, and as the consumer goes, so goes the economy. We believe investors should pay close attention to unpaid credit card balances for signs of any cracking within the consumer sector.  
 
Stubborn inflation is one reason credit card debt has spiked recently and amid rising balances, credit card rates reached an all-time high since the data series began in 1972, pushing additional pressures on consumers. The third item to highlight is the shifts in emerging trends in inflation that will likely continue throughout the rest of this year. Although inflation is trending in the right direction, it doesn't mean another rate hike this year is out of the question, especially with rising prices for gas. However, we think the Federal Reserve will pause during its September meeting, but we'll keep everything on the table for the November meeting. Investors should find plenty of opportunities in this market despite the disproportionate easing in inflation pressures. 

Please continue to follow LPL Research on Twitter, LinkedIn, and YouTube for more insight.

Read. Listen. Watch.

Keep up with economic insights from the LPL Research team. Read Weekly Market Commentary. Listen to Market Signals Podcast. Watch Street View.

LPL Newsroom

Thought leadership. Advisor stories and tips. And, Research. Find the latest insights from advisors, what’s new for advisors, and the latest from LPL Research.

LPL’s Thought Leadership Series

Throughout the year, LPL’s Thought Leadership team takes a look at those things that impact and help advisors, providing advisor stories and advisor solutions.

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change. 

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index data is from FactSet.

Municipal bonds are subject to availability and change in price. They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-free but other state and local taxes may apply. If sold prior to maturity, capital gains tax could apply. 

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 

Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).

Not Insured by FDIC/NCUA or Any Other Government Agency

Not Bank/Credit Union Guaranteed

Not Bank/Credit Union Deposits or Obligations

May Lose Value

RES-1607096-0723 | For Public Use | Tracking # 1-05377573 (Exp. 08/2024)