April 27, 2017 7:38 am
The following is an excerpt from my monthly TSP report that I’ve created to guide Federal Employees in allocating their money in the Thrift Savings Plan.
Facts:
- Of the four broad economic indicators, three were positive this month.
- Unemployment was improved, down to 4.5% which is 0.2% lower than it was last month.
- PMI, again, showed solid ground at 57.2%. The 3-month performance has been comfortably over 56%. The last time PMI had a 3-month run over 56% was early 2011!
- The GDP growth estimate for the 4th quarter 2016 was revised up to 2.1%, from the previous estimate of 1.9%
- The S&P 500, however, dropped 1.5% in the month of March. The 3-month performance is still a solid 4.47%
Assessment:
- Again, PMI’s numbers display strong expansion, and is a nice indication that U.S. manufacturing is alive and well.
- Unemployment is going down, meaning more people have jobs, which in turn boosts economic revenue.
- The updated GDP levels are healthier than expected.
- Admittedly, we need to make sense of the S&P 500 performance. The 1-month performance can be appreciated in the context of a 11.32% 5-month return. Yes, a 1-month decline to taper a robust 5-month performance.
Bottom Line:
Overall, the US economy is looking healthy, what I would describe as an early-mid stage of the economic cycle. In such an environment, even a small dose of stocks can boost overall portfolio performance. Remember, DON’T JUST LOOK AT RATE OF RETURN. Always view the target return of each portfolio in the context of its ranges of fluctuation. You may see the higher portfolios are not as risky as they looked last month. The TSP portfolios below carry the greatest return for the least amount of risk in this economic environment. (TSP portfolios can be accessed by subscribing to the TSP Planning Membership Service)
To subscribe to the TSP Planning Membership Service CLICK HERE.
Categorised in: thrift savings plan, TSP, Uncategorized
This post was written by Stephen Zelcer
