2023 Midyear Market Update

By Net Worth Advisory Group

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As we recently passed the halfway point of 2023, now is the perfect time to evaluate the different economic indicators that influence our economy and investments. After a challenging 2022, the first half of this year has exhibited positive developments in several sectors. Take the following insights from our team at Net Worth Advisory Group as we examine these areas and explore strategies to prepare for the second half of the year and the months that follow.

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The Markets Are Up

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So far in 2023, the performance of the financial markets has been measured, yet positive. As of July 19th, the Dow Jones is up 5.83% while the S&P 500 has seen a solid rise, up 18.92% for the year to date. The Vanguard Total Stock Market Index Fund, providing a broad snapshot of the entire U.S. market, has increased 19.38% this year. The tech-centric NASDAQ has shone brighter, growing a noteworthy 37.1% this year.

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Underlying these market movements, the U.S. GDP maintains positive, yet isn’t high enough to be called robust. Meanwhile, the Federal Reserve continues its trend of gradually raising interest rates. Despite this seemingly stable backdrop, it remains uncertain how these various forces will influence the stock market’s performance in the second half of 2023.

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Employment Is Strong

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The U.S. employment scene shows steady progress with an unemployment rate of 3.4%. Despite this promising figure, representing 5.7 million active job seekers, there are complexities beneath the surface. While unexpected job losses and short-term unemployment have decreased, the numbers of long-term unemployed and part-time workers desiring full-time roles remain a concern. Also notable is the rise in people outside the labor force but eager to work, up to 5.3 million.

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GDP Is Growing

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The U.S. economy has shown signs of rebound in Q1 2023 with an annualized GDP growth of 1.3%, slightly exceeding the initial estimates and market predictions of 1.1%. Consumer spending growth outperformed expectations, rising to 3.8% despite ongoing high inflation.

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This growth, while not overly impressive, still stands in contrast to 2022, which saw two negative GDP quarters. It is also expected to continue, with forecasts predicting a growth rate of 1.5% by the end of the second quarter.

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The Federal Reserve, Interest Rates, and Inflation

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The Federal Reserve has raised its key interest rate to the highest level in 16 years to combat high inflation. After a streak of 10 rate hikes, in June the Federal Reserve hit pause on those hikes while reassessing the current economic growth and inflation. Despite these increases, inflation remains above the Fed’s 2% target, currently sitting at 3%, far lower than its peak of 9.1% in 2022. It remains to be seen whether interest rates, or inflation, will bounce back higher and hamper the economy for the remainder of 2023 as well as 2024.

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The World Is Experiencing the Same Issues As the U.S.

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Global growth is projected to decline from 3.4% in 2022 to 2.8% in 2023, the lowest medium-term forecast in decades, largely due to the tight policies needed to curb inflation, deteriorating financial conditions, and geopolitical tensions. Inflation is expected to decline from 8.7% to 7% between 2022 and 2023. Despite the cautious outlook, the MSCI All Country World Index is up over 14% so far this year.

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Partner With a Trusted Professional

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Understanding and analyzing economic data and projections is essential as you prepare for the rest of 2023. However, it’s important to recognize that this is only a piece of the total puzzle. To fully leverage these insights, it is crucial to integrate them into a comprehensive financial plan that addresses your individual goals. For example, determining the amount you need to save to meet your retirement objectives, establishing a safe annual distribution from your accounts, and optimally structuring your investments will improve your overall financial strategy. Regardless of external factors such as the economy, the Federal Reserve, Congress, or inflation, these are elements that you do have control over.

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If you haven’t already developed a plan that addresses these vital questions, our team at Net Worth Advisory Group is here to assist you. Let’s collaborate to create a strategy tailored to your unique financial needs and goals. Call us at 801-566-6639 or schedule a complimentary, no-obligation consultation to see if we are a good fit to help you pursue your goals.

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To learn more, visit our website.

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About Net Worth Advisory Group

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Founded in 2003, Net Worth Advisory is an independent, fee-only, CERTIFIED FINANCIAL PLANNER™ and investment advisory firm located in Salt Lake City, Utah. We specialize in helping people transition from the workplace into retirement, and ensuring that those who are already retired will not outlive their nest egg. Our top priority is to have clients experience a greater sense of ease with diligent, personalized wealth care and the implementation of customized financial plans and ongoing personalized asset management. We equip all clients with a comprehensive financial plan, meeting every six months to update as needed and review investment performance. Our team is passionate about providing comprehensive financial planning with the fee-only model, and we love feeling like we’re making a difference in our clients’ financial lives.

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As a NAPFA-registered fee-only advisory firm, our recommendations are untainted by a hidden agenda to sell financial products paying large commissions. Unlike our competitors at brokerage firms, insurance companies, and banks, we are compensated solely by our clients, so we are financially motivated to provide objective advice that is always in our clients’ best interests. Anyone can call himself or herself a financial planner, but only an advisor with the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation has met the education, examination, experience, and ethical requirements mandated by the CFP® board. Of the estimated 800,000 financial advisors in the U.S., only 55,000 have earned the CFP® designation. All Net Worth advisors are either CFP® professionals or CFP® professionals in training.

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Net Worth Advisory’s mission is to significantly improve the lives of our clients by delivering exemplary financial planning and wealth management advice that enables them to live the lives they have imagined.

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