Distorted
Submitted by Sound Foundation Wealth Advisors on August 22nd, 2022
With less than three months left before the 2022 midterm elections, it is officially silly season when it comes to interpreting economic reports. For many analysts it’s pretty much all politics all the time, with data seen through a political lens first, and with real unbiased economic analysis coming maybe second, if ever.
The U.S. equity markets had the worst first half since 1970, entering bear territory. And then, in July, equities turned in the best performance since November of 2020, recovering over 9%.
That can all be described by one word: volatility.
With the Senate having passed a budget plan yesterday with only Democratic votes as well as a tie broken by Vice President Harris, it is only a matter of time before President Biden signs the first significant tax hike since the “Fiscal Cliff” tax hike in early 2013. What’s important to keep in mind is that it could have been worse…much, much worse.
The Federal Reserve raised short-term interest rates by three-quarters of a percentage point (75 basis points) on Wednesday. The day before, the Fed had released M2* money supply data for June and it fell slightly, the second decline in three months.
Headlines have been all about the potential for an economic recession in the near term. The most recent recession was in early 2020, at the beginning of the pandemic – and it was the shortest recession on record, lasting just two months.