The books have closed on 2019 and it was one for the ages. When the dust settled, the S&P 500 closed the year up 31%. A great year by any measure. The economic recovery that began in July, 2009 finished its 10th year and is now the longest running economic expansion in US history. Various factors driving the market included the following:
- Entering 2019, investors were on edge as the Federal Reserve president had spent the entire fourth quarter preparing markets for up to three rate increases. Concern subsided when on January 4th, he completely reversed course and embarked on three Fed rate decreases. Currently, there is no reason to believe rates will increase in the near future.
- Trade tensions dominated the headlines all year. By the end, China signaled a willingness to sign a Phase One deal. Considering the political polarization inside the US, it was encouraging to see any two groups work together on an agreement benefiting both parties.
- US GDP growth remained above 2%, unemployment continued at record lows, job creation and wage growth progressed and consumers found reasons to spend. With everyone working, earning more and then spending some of their earnings, economic growth was the result.
2019 defied the expectations of experts and investors alike. It was a truly remarkable year. With that said, the manufacturing sector continued its decline and the overall pace of growth may not create the same level of opportunity enjoyed in recent years. Economic growth is slowing from the elevated levels of previous years, but the current pace feels sustainable.
All the best in the New Year!