According to official data the US economy slowed to a three year low amid lower auto sales, heating bills and slower consumer spending, which grew at a seasonally adjusted annual rate of 0.3 percent.
This comes on the back of 2.1 percent fourth quarter GDP.
— David Thomas (@djthomas) April 29, 2017
The usual suspects have been carted out from the depths of mainstream financial journalists’ favourite copy and paste go-to’s: warmer weather negatively impacting spending on heating bills and downturn in auto sales following a strong fourth quarter.
This all maybe the case but regular readers have been here before.
But before I get to that remember that President Trump has an annualised target of 3% growth for the US economy and economists are generally sceptical that growth will reach his target indicating instead just 2.2% to 2.3% annual growth through 2019.
Why Value Investors Already Know The True State Of The US Economy
In an article called Zero Hedge Lays Bare The Lunacy and Falsehood of US GDP (Whilst I Blame Greedy Pig Financial Banksters) the opening lines began thus:
It’s not just the writers at Zero Hedge who have been covering the lunacy and falsehood that is US GDP this but their article last week claimed that it took $4 in new debt to create just $1 in GDP for 2016.
Zero Hedge also relate another shocking aspect of the US economy: it is now at a level of 350% total credit/GDP, a level which has been relatively flat since it peaked at 380% just before the 2008 financial crash.
The value of the US dollar over many decades has also been (and is being) totally destroyed and has left those who work for it in an ever tightening position where they have to work harder just to maintain their current standard of living.
Taking a deeper look at what the large-cap retailers are saying also gives us an insight into the state of consumer spending in the United States and United Kingdom:
- Shock Horror: The US High Street Is Also Feeling The Pinch
- Whoopsie: Next Plc Says The Future Looks Bleak
Speaking of the United Kingdom first quarter GDP recorded an even worse number than the US coming in at 0.3% down from 0.7% in the fourth quarter weaker than The City had expected.
The reason why I highlight these issues is not to be an eternal doomsayer but to highlight where the next investments for the portfolio might come from.
Chaos, disaster and general financial mayhem is where the next value-orientated investment will come from.
If there’s one takeaway from this post and you are on the hunt for stock market advice it is this: look for undervalued stocks in the auto and retail spaces, you might find one or two that conform to a classic undervalued stock.