« Back to Blog

The U.S. Economy is Very Strong (8/2/2018 analysis)

Posted August 2, 2018

For the second quarter (Q2) of 2018, U.S. gross domestic product (GDP) grew by an annualized rate of 4.1%. This is an encouraging increase from Q1 growth of 2.2%. 2018 is on track to grow by 3% or more, which has not happened since 2005. This achievement was produced by strong consumer spending, increased business investment, robust government outlays, and substantial tariff-driven exports.

Is this U.S. Growth Rate Sustainable?

Tariff deadlines imposed by our trading partners in retaliation for U.S. tariffs caused a spike in U.S. exports to beat the increase in prices. This spike will not likely be repeated now that the tariff penalties are already taking place. Due to tariffs, U.S. steel and aluminum prices are up 33% and 11% respectively, hurting U.S. manufacturers that use these metals. Costs are rising on recreational vehicles, cars, bulldozers, washing machines, soda, beer, and more. Even so, U.S. corporate earnings are on course to grow by 20%+ for Q2, matching the strength of earnings growth in Q1. Beyond the volatility and weakness in some tech companies, the broader U.S. stock market is resilient as it approaches new highs. Apple just reported a 32% jump in profits for Q2 helping Apple stock to gain 3% in after-market trading on July 31. Apple is very close to reaching a $1 trillion market value, the first in world history. We celebrate this beacon driving U.S. stocks forward.

Tariff and Trade Developments

The recent meeting between President Trump and Euro Commission President Jean-Claude Juncker produced a tariff truce and a pledge to work toward zero tariffs between the U.S. and the EU. Europe will buy more U.S. soybeans and liquefied natural gas (LNG). If Trump will turn down the heat in the trade disputes, this will help sustain the U.S. GDP growth rate. There may be rapprochement with China too.

Stable Growth and the Bond Market

Our Class 4 funds, which make up the core of our Stable Growth strategy, showed solid returns in July. The Fed began hiking interest rates at the end of 2015 and has now increased rates by 1.75%. The yield on the 10-year Treasury, however, has only increased 0.50% over this same period, adding some measure of stability to the bond market. Bond funds continue to add important diversification, stability, and increasing yields.

Sign up for our monthly Bell e-News.

To get the latest news and updates from us, please fill out the form and click "Subscribe" to receive our e-newsletter.

Market Analysis

White paper feature image
“Stocks are falling. I’m buying them anyway.” – 12/4/18
December 5, 2018 The above is a quote from Jeff Sommers as the title of his 11/18/2018 “Strategies” column in …Read More


bellinvest publicaion
Do You Have a Bias Against International Small-Cap Stocks?
October 25, 2018 With the S&P 500 fully recovered from the correction earlier this year, and hovering near its …Read More

Latest News

Piedmont East Bay Children’s Choir Candlelight Concert

Bell Investment Advisors has been a major supporter of the Piedmont East Bay Children’s Choir (PEBCC.org) for almost ten years. We are lifelong music lovers and consider our involvement with Bay Area music and arts organizations central to making a good life happen for our family, our business, and our community. On Sunday, December 2 from …Read More

Latest Tweet

Connect With Us

bellinvest 20 year