A Booming Economy
The latest GDP numbers show that the U.S. economy is strong, vibrant and growing.
They showed that the U.S. economy grew by an impressive 3.5% in the third quarter.
Consumer spending, which accounted for 2.5% of that 3.5% growth, was especially strong. Shoppers went on a record spending spree over the Thanksgiving weekend.
For the year, GDP is on pace to exceed 3% — the first time that’s happened since 2005.
At the same time, consumer confidence is at an 18-year high, the unemployment rate is at a five-decade low and corporate profits are soaring.
Business Profits Surged to New Highs
It didn’t get much media attention, but also included in the same Bureau of Economic Analysis report was telling (and impressive) news about corporate profits.
Before-tax corporate profits in Q3 were up 10% on a year-over-year basis. However, the after-tax profits were up by 19%, largely because of the Trump tax cuts.
The numbers coming out of Corporate America show the same prosperity. Ninety-six percent of companies in the S&P 500 have reported their Q3 results, and operating profits increased by 32% year over year, the highest growth rate in since 2010.
Just look at how corporate profits have exploded quarter after quarter for the last 2.5 years:
Q3 ’09: $15.78
Q3 ’10: $21.56
Q3 ’11: $25.29
Q3 ’12: $24.00
Q3 ’13: $26.92
Q3 ’14: $29.60
Q3 ’15: $25.44
Q3 ’16: $28.69
Q3 ’17: $31.33
Q3 ’18: $41.49 (new high).
I don’t buy the doom-and-gloom warnings about a bear market. Remember, bear markets are born out of recessions, and our strong and growing economy is nowhere close to rolling over.
The American economy is HOT.
And that is why the right move is to stay invested. Hold onto your positions.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch
Editor’s note: Before I forget — if you haven’t already, pick up a copy of my book The Little Black Book of Income Secrets. Click here to find out how to claim your free copy.