Last week we received a surprisingly high first estimate of second-quarter GDP growth of 3 percent, which some touted as proof positive of the wonderful impact of tariff policy. Then we received a very poor jobs report, which others touted as proof positive that government data is rigged and can’t be trusted. How does the economy grow at 3 percent, yet create so few jobs?
The one thing that can be guaranteed in any financial plan is that the future will not be exactly as predicted. It may be close, but it could also be dramatically different. The one universal thing that every single financial plan needs is flexibility. Yet, it is hardly ever discussed. It is the missing ingredient.
If one of the most famous economists of all time could not profit from top-down economic forecasts, then how in the world could the average investor do any better? It is far easier to analyze a company and determine whether it is a good business worth investing in than to try to figure out what economic growth will be in a year and what that means for investing today. This may sound counter to what Wall Street says, but investors need to remember that Wall Street is in the transaction business.
One of the keys to a successful life is to keep one’s focus on what he or she can control. We cannot control what this administration does or the reaction of the masses that are wreaking havoc on the markets; We can control how we react, and in the long term, that will be the most important factor.
Will tariffs be the end of us? I am reminded of my college microeconomics professor, who liked to say that the economy was stronger than any government. I would add that both the economy and the market are stronger. Tariffs and the threat of tariffs have caused uncertainty, and contrary to the motto, they have actually put America last. On the surface it would seem that my good professor and I are wrong; however, one needs to look deeper.
