Last week, the Federal Reserve Bank of Kansas City hosted their annual Economic Policy Symposium which has taken place in Jackson Hole every year since 1982. This year’s theme for the event was Structural Shifts in the Global Economy:
“While the immediate disruption of the pandemic is fading, there likely will be long-lasting aftereffects for how economies are structured, both domestically and globally, as trade networks shift, and global financial flows react.”
Key takeaways from the meeting included the acknowledgement that in the bigger picture the global economy is changing due to deglobalization and central banks moving away from years of low rates and quantitative easing. In turn, for investors this most likely means more volatility in economic and market data, but also greater diversification benefits from broader asset class allocations as correlations between economies and market decrease. In the shorter term though, as concluded by the Fed Chair Jerome Powell in his speech on the economic outlook, is that the Fed is not likely to cut short-term rates anytime soon. The economic data remains mixed, however, and Powell acknowledged that the Fed is “navigating by the stars under cloudy skies.”
Another highlight from last week was that The GDPNow from the Federal Reserve Bank of Atlanta rose again last week and is now predicting Q3 2023 GDP at 5.9%. This is after inflation. Outside of the post COVID economic bounce, this could be the best quarter since 2017.
As for potential market-moving events this coming week, there is some key economic data toward the end of the week, including inflation data Thursday and employment data Friday.
Add it all up...
Stay invested. Stay diversified. Stay disciplined.