This Weekly Market Update reviews the top three market headlines: Consumer Confidence Falls, U.S. Budget Deficit on the Rise, Eurozone Sees Softening Job Market
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Top Three Market Headlines

Consumer Confidence Falls:  Driven by concerns over trade and tariff tensions, consumers’ expectations regarding the economic outlook retreated in June. The Conference Board, a private research group, reported that its Consumer Confidence Index fell to 121.5 in June, down from 131.3 in May and the lowest level in 21 months. While the index still remains at relatively high levels, continued uncertainty may result in further volatility in the index. Consumers’ appraisal of current-day conditions is further reflected by the 16.4% share of respondents who reported that “jobs are hard to get,” the highest percentage level since November 2017.

U.S. Budget Deficits on the Rise: According to the Congressional Budget Office (CBO), given the higher spending on Social Security, Medicare and rising interest costs on government debt, annual U.S. budget deficits are projected to outpace federal revenues in the coming decades. Federal deficits as a share of gross domestic product (GDP) will rise to 4.5% in 2029 and 8.7% in 2049 from 4.2% in 2019. This rising trend would push the overall debt load to 144% of GDP by 2049 compared to 78% this year. However, projected lower interest rates in the coming years, which translates to lower borrowing costs for the government, modestly boosted the CBO’s long-term projection from last year,  

Eurozone Sees Softening Job Market: The Eurozone job market has shown signs of late of slowing down. Purchasing managers in the region reported payroll cuts in May and only very modest additions in June. Recent economic data out of the region also echoes concerns that the job market is cooling: for instance, the Eurozone’s manufacturing PMI posted below 50 (indicating economic contraction) for a fourth successive month in May in response to weaker global demand for exports. Amid the cooling job market and lack of investment opportunities, ECB’s economists have lowered their expectations on employment growth and believe that economic weakness may persist in some Eurozone countries.

Data Points:

  • The Consumer Confidence Index fell to its lowest level in 21 months at 121.5 in June.
  • The U.S. government’s overall debt load as a percentage of GDP is expected to almost double to 144% by 2049. 
  • Eurozone manufacturers’ hiring intentions in May were at their lowest level in three years. 

As of June 28, 2019

Week

Quarter-To-Date

Year-To-Date

One-Year

MSCI All Country World

0.09%

3.61%

16.23%

6.45%

S&P 500

-0.27%

4.30%

18.54%

10.51%

Russell 2000

1.16%

2.10%

16.98%

-3.41%

MSCI EAFE

0.65%

3.68%

14.03%

2.11%

MSCI Emerging Markets

0.39%

0.61%

10.58%

3.42%

FTSE NAREIT

-2.12%

1.24%

17.78%

11.38%

Bloomberg Commodity

1.08%

-1.19%

5.06%

-6.08%

Barclays Aggregate

0.43%

3.08%

6.11%

7.91%

The Conference Board 06/25/2019 WSJ 06/23/2019 WSJ 6/25/2019 IHS Markit; Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.