TSP Planning Report May 2023
Facts:
- The 2nd estimate of Q1 (2023) GDP has come out, showing a 1.3% growth in GDP. This is on the heels of 2.6% GDP growth in Q4 2022.
- The G Fund rate for May 2023 remained at 3.625%.
- The Fed Funds interest rate increased to 5.25%. It was 4.83% just a month ago.
- This month’s unemployment rate decreased from 3.5% to 3.4%.
- PMI (Purchasing Managers Index) expanded for the 2nd straight month, reading 54.5 this month (any reading above 50 represents expansion.
- The S&P 500 (C Fund) increased 0.9% in May. YTD, S&P500 is up 9.9%
Assessment:
PMI expanding –
Once again, PMI expanded, showing an uptick in growth. Even though companies posted declined sales for the past quarter, there is reason to assume growth for this coming quarter. This sent markets up.
However, if you read the details within the PMI report you will notice that the expansion was primarily in service-related businesses (accounting, hospitality, etc), however the manufacturing PMI showed a drop. This means people are spending less on products and more on services.
It’s not clear why this is, but certainly even service-based businesses rely on products, and if there’s a slow down of product, that could reflect a slow down of services.
Bottom Line:
For two months in a row the economic metrics have been positive. If this trend continues for another month we may have permission to take the foot off the brakes and enjoy a positive ride.
See this month’s recommended portfolios. DON’T JUST LOOK AT RATE OF RETURN. Always view the target return of each portfolio in context of its ranges of fluctuation.
Anyone who has more than 5 years before drawing income from their TSP should consider taking a more aggressive posture going forward and use my aggressive portfolios below. If you are within 5 years of retirement, you should email me to get a more customized recommendation.
If you have any questions, feel free to contact me.
Email me here – stephen@stephenzelcer.com
