Second Quarter 2023 Review

For the past year, many economists and major banks have been forecasting a looming economic downturn in the US. It didn’t arrive in the first half of 2023.

From an investment standpoint, the stock market has a long history of performing well in a ‘balanced economy.’ Boom times make for exciting headlines, but an economy with very strong growth and full employment are subject to excess risk-taking, ballooning asset prices, inflation, and monetary tightening—none of which are ultimately good for financial markets.

Today, inflation and tight labor markets remain focal issues, but the economy has charted only modest growth, and the Fed is closer to the end than the beginning of monetary tightening. We think these conditions are supporting stocks.