With the Federal Reserve indicating repeatedly that it will not raise lending rates to quell a spike in inflation -- from the current rate of about 1.6% to its target rate of 2% -- the U.S. economy is rocketing like never before.
March retail sales figures, released yesterday, surged +9.8% higher than in February. It was a huge surprise! Wall Street analysts had been forecasting a +1.3% rise in retail sales. Surges of this magnitude were unprecedented, until the comeback from the Covid pandemic and government stimulus.
For the 12 months through the end of March, total retail sales shot +27.9% higher.
Retail sales comprise 30% of gross domestic product and are a key component of consumer spending.
Meanwhile, this morning, the Census Bureau reported housing starts in March came in at 1,739,000 in March, beating the 1,610,000 expected. This is +19.4% above the revised February estimate of 1,457,000 and +37% above the March 2020 rate of 1,269,000.
March housing construction permits, a forward-looking indicator of housing starts, came in at 1.766 million for March, suggesting the housing boom will continue in April.
The Standard & Poor’s 500 stock index closed Friday at an all time high of 4,185.47. The index gained +0.36% from Thursday’s closing price and +1.36% from last week’s closing price. It was the fourth week of gains in a row. The index is up +60.66% from the March 23rd bear market low.
Stocks are a growth engine in a diversified portfolio managed for the long run but just one asset in a portfolio strategically designed around your personal situation, goals and risk appetite. In expectation of higher estate and income taxes on high-income and high net-worth individuals in 2021, and the stock market repeatedly breaking records, this is a good time to plan for the accelerating pace of economic growth and pending tax-law changes likely to be enacted in the weeks ahead.
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