Today, I’m sharing five of my favorite investing and economic charts from the past month.

These charts cover topics like:

• Market volatility
• Inflation
• Fed rate cuts...and more!

Before we dive in, did you catch this week's podcast episode?

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Favorite Charts (July 2024)

Here are my five of my favorite investing and economic charts from the past month.

#1 - There’s Always Something

While politics tend to become the chief concern during every election season, the truth is that there is always something that the media is encouraging you to worry about.

​The chart below shows what fund managers believed each quarter's "biggest risk" to be over the last thirteen years.

Two things stand out about this list:

First, while some concerns linger longer than others, this list of worries is ever-changing. As the saying goes, "First it's something, then it's nothing."

Second, the market is up more than 4X(!) since the start of this list in 2011. Thus, staying the course through it all was a good call.

#2 - The Market Has Been Remarkably Calm

The past 18 months have mostly been a steady climb higher.

In fact, we experienced 350+ trading days since the last time the market had a single-day drop of 2% or more—a streak that was snapped last week.

While the lack of volatility was nice, it was never going to last forever. Volatility is normal and should be expected by investors.

Said another way, "Volatility is the price you pay for performance."

#3 - This Bull Market Is Still Young

The return of volatility does not necessarily indicate that we're nearing the end of this bull market. We may or may not be, but historically speaking, this bull market is still very young.

In fact, if this bull market were to end now at 20 months, it would be the shortest bull market in the post-WWII era and significantly shorter than the average bull market of 61 months.

So, while it's certainly possible for the market to top out soon, it's historically unlikely.

#4 - Inflation Is Below the 1950 Average

A major positive development is that today's 3.27% core inflation rate is now below the average inflation rate since 1950 of 3.53%.

Given the recent disinflation (falling prices) in grocery prices and core services, among other areas, it seems likely that inflation is finally under control again. If the Fed agrees, a rate cut may finally be on the horizon.

#5 - Fed Rate Cuts and Market Performance

As rate cuts loom, the natural next question is:

Historically, following an initial rate cut, future returns are largely dependent on the economic environment at the time of the cut.

That said, the chart below shows that since 1984, the median six-month return following a first rate cut has been +9.2%.

💥 BONUS - Debt Is on the Rise, but the Headlines Are Misleading

You don't have to look far to find news stories about the growing debt burden that consumers are facing today, but these headlines don't tell the whole story.

The only way to know if a single data point (like total debt) should be concerning is to see how it stands relative to other important and relevant variables.

First, consumer net worth, which factors in both total assets and total debts, is currently at an all-time high (see left axis and blue line). In other words, asset growth has outpaced the growth of consumer debt.

Second, we should also compare debt payments to consumers' ability to pay (debt service ratio), which is in as good of a position as it has been in decades (see right axis and red line).

Are there people struggling financially in today's economy? Absolutely. But with net worth and debt service ratios in healthy positions, the "rising debt burden discussion" appears to be, at the very least, a bit misleading.

Bottom Line

While everything noted above is abundantly positive, I'd be remiss if I didn't acknowledge that the economy is slowing, as the media continues to emphasize.

But we should remember that the Fed's stated goal with its aggressive interest rate strategy was to slow our economy (to combat inflation), so we shouldn't necessarily be surprised.

This was the game plan all along, and their approach has worked quite well despite the rhetoric.

Our economy is still strong, consumers are in a good financial position—even if neither is as strong as it once was—and the stock market remains near all-time highs.

In other words, even if things could always be better, we have much to be optimistic about.

As always, hit reply with any questions or comments.

Thank you for reading.

Stay wealthy,

Taylor Schulte, CFP®