Economic & Market Outlook

Transcription

1 Economic & Market Outlook August 2017 The investments described herein are: NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL OR STATE GOVERNMENT AGENCY

2 Average Hourly Earnings Wage gains are still weak relative to what many expected given the tight labor markets. Total Private Employment +2.4% y/y Manufacturing Industries +2.3% y/y Despite significant tightening of the labor markets, wage growth has so far remained very low compared to past cycles. Service Industries +2.3% y/y 2

3 Demographics: Providing for an Aging Population And labor markets are likely also tightening because of longer-term demographic changes U.S. Population By Age (as a % of Total Population) Ages /31/2050 = 47.7% ( ) Source: U.S. Census Bureau Ages 25 to 64 Ages 65 and older Ages /31/2050 = 32.1% ( ) 4.0 : / Yearly Data 12/31/ /31/ : / 65+ Ages /31/2050 = 20.2% ( ) (E985) Copyright 2012 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved. See NDR Disclaimer at For data vendor disclaimers refer to 3

4 Business Sector 4

5 Business Sales Business sales have increased over the past year, but are flat relative to three years ago. R e c e s s i o n E x p a n s i o n Average of the Last Six Economic Cycles Current Economic Cycle Business sales have grown faster this past year, but have been flat over the last three years. 5

6 Capacity Utilization Low capacity utilization rates have made many industries intensely competitive. U.S. capacity utilization has eroded significantly over the last 50 years

7 Consumer Income & Spending Growth 7

8 Income and Spending Growth Spending outgrew income last year, but has slowed this year. Personal Income +2.8% y/y After-tax Income +2.8% y/y Consumption +4.2% y/y

9 Exports 9

10 Exports Exports struggled as the dollar rose in value but may improve as the dollar weakens. Average of the Last Six Business Cycles R e c e s s i o n E x p a n s i o n Current Economic Cycle 10

11 Purchasing Power Parity (Net of Inflation) of the U.S. Dollar Most international currencies are cheap relative to the dollar. The U.S. dollar is about 10% overvalued.

12 Market Outlook 12

13 Key Private Bank Investment Recommendations Stocks Bonds Cash Alternative Assets Emphasize Deemphasize Minimal Client Specific Geographic Region United States Developed International Emerging Deemphasize Emphasize Neutral Market Capitalization Large Cap Mid-Cap Small Cap August 2017 Emphasize Deemphasize Deemphasize

14 Disclosures Key Private Bank is part of KeyBank National Association. Trust services provided by KeyBank National Association. Investments are: NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE NOT A DEPOSIT NOT INSURED BY ANY FEDERAL OR STATE GOVERNMENT AGENCY 14