Taking Stock of the State of the Economy
We are a little past the halfway point of the year, so it is a good time to take a look at where we are – and where we might be going.
First, it is important to note that the U.S. economy had an impressive recovery from the pandemic, and it essentially has returned to its pre-pandemic growth levels. According to the World Economic Forum, U.S. economic growth was up 5.9% in 2021, and it has continued to grow. The fear, though, is that this growth could end in a recession.
Let’s start with a look at the positive indicators: We have low unemployment. Despite some bank failures earlier in the year, there have been no widespread failures. The Federal Reserve’s interest moves have kept inflation mostly under control. The stock market has been relatively positive this year. And our divided federal government managed to find a way to avoid a shutdown. The economy is starting to hit on all cylinders again.
But there are still potential problems, including uncertainty about future steps the Fed will take with interest rates, an unsettled housing market, and general political unrest at home and internationally. As a result, most financial observers say that while it is possible – and maybe even likely – that we will have at least a slight recession, many also think it is possible that we might avoid it.
If we are honest with ourselves, we realize that there is no crystal ball that can tell us where markets are going. After all, who could possibly have predicted the collapse triggered by the pandemic? That’s why at Peachtree Investment Partners, we believe in taking the longer view. We start by asking you about your risk tolerance, your investment timeline and your overall financial picture.
In general, we focus on the stocks of large, established American companies that are well-positioned in their industries and have strong and experienced leadership. We look for consistently good return on investment and a long history of revenue and earnings growth. We choose companies that have weathered many cycles of economic, political and social change and that have avoided most of the market’s extreme highs and lows.
We also believe strongly in stocks that pay dividends. Dividends provide a shield against market volatility because all your return does not come from an increase in the stock price. Choosing to reinvest your dividends also can help to grow your portfolio significantly over time.
Of course, there are no guarantees in investing. But our experience has shown us that this personalized approach can help maximize long-term returns and minimize volatility – and stress.
On a personal note, I would like to announce that Courtney Schaefer Deveau, my oldest daughter, has joined Peachtree Investment Partners as director of business development. Courtney graduated from the University of Virginia and has worked in development at The Museum of Modern Art (MoMA) in New York and at Pace Academy in Atlanta. She and her family live in Atlanta. Please join me in welcoming her to the firm! She can be reached at courtney@peachtreeinvestment.com.
Garry K. Schaefer
July 25, 2023
Peachtree Investment Quarterly may offer general financial, insurance, tax and business ideas. However, due to the ever-changing tax laws as well as the complexity of the financial industry, you should seek professional advice before implementing any of the ideas contained in this newsletter. Peachtree Investment Partners, LLC (TM) assumes no liability whatsoever in connection with the use of this newsletter.
