Back to View all
Chart of the week

GDP spikes haven’t altered the low-growth landscape

Quarterly GDP growth since 2010

July 20, 2018 | 1 minute read
Quarterly GDP growth since 2010
  • Federal Reserve Chair Jerome Powell delivered an upbeat assessment of the U.S. economy in two presentations to Congress this week as newly released data supported his outlook.1 Retail sales in June, for example, reached its highest annual growth rate since early 2012 while initial jobless claims last week fell to a near 50-year low.2,3
  • The Federal Reserve Bank of St. Louis’s GDPNow tracker estimates that Q2 economic growth, to be released next week, will be 4.5%, which marks the model’s highest forecast since Q4 2011.4
  • U.S. GDP has spiked several times since 2010. As the chart shows for this time frame, there have been five quarters before Q2 2018 where GDP growth either approached or exceeded 4%.5 In each case, growth slowed significantly the following quarter. Over the entire period, GDP growth has averaged a meager 2.2%.5
  • The Fed continues to project a gradual slowdown in the coming years, with a projected longer-run economic growth rate of just 1.8%.6 At the same time, 10-year U.S. Treasury yields, which often serve as a proxy for expected economic growth, sit near the lower end of their recent 2.8%–3.1% trading range.7
  • Thanks to recent tax changes and fiscal policies, economic growth may well be above trend in 2018. As the stimulative effects of these policies wear off over time, however, investors may need to position their portfolios for a low-growth environment over the long term.

The chart of the week and any accompanying data is for informational purposes only and shall not be considered an investment recommendation or promotion of FS Investments or any FS Investments fund. The chart of the week is subject to change at any time based on market or other conditions, and FS Investments and FS Investment Solutions, LLC disclaim any responsibility to update such market commentary. The chart of the week should not be relied on as investment advice, and because investment decisions for the FS Investments funds are based on numerous factors, may not be relied on as an indication of the investment intent of any FS Investments fund. None of FS Investments, its funds, FS Investment Solutions, LLC or their respective affiliates can be held responsible for any direct or incidental loss incurred as a result of any reliance on the chart of the week or other opinions expressed therein. Any discussion of past performance should not be used as an indicator of future results.

This information is educational in nature and does not constitute a financial promotion, investment advice or an inducement or incitement to participate in any product, offering or investment. FS Investments is not adopting, making a recommendation for or endorsing any investment strategy or particular security. All views, opinions and positions expressed herein are that of the author and do not necessarily reflect the views, opinions or positions of FS Investments. All opinions are subject to change without notice, and you should always obtain current information and perform due diligence before participating in any investment. FS Investments does not provide legal or tax advice and the information herein should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact any investment result. FS Investments cannot guarantee that the information herein is accurate, complete, or timely. FS Investments makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

Any projections, forecasts and estimates contained herein are based upon certain assumptions that the author considers reasonable. Projections are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The inclusion of projections herein should not be regarded as a representation or guarantee regarding the reliability, accuracy or completeness of the information contained herein, and neither FS Investments nor the author are under any obligation to update or keep current such information.

All investing is subject to risk, including the possible loss of the money you invest.

Print this page Email this page

Related Insights

Chart of the week

Private and public company earnings taking divergent paths

This week’s chart looks at a shifting opportunity set as the private middle market shines while small cap company earnings remain challenged.

Chart of the week

Family offices plan material increase to private markets

This week’s chart looks at family office CIOs’ plans to increase allocation to alts in 2024, specifically private credit and private equity.

Chart of the week

The clear opportunity in a healthy middle market

Despite allocation challenges, revenue growth in the U.S. middle market remains healthier than ever as this week’s chart highlights.

Search our site