Billionaire's Portfolio

February 28, 5:00 pm EST

We end the month of February today, continuing the big recovery for stocks.

After a decline of 10% in December.  We were UP 9% in January and UP 3% in February.

As we’ve discussed, the sentiment data is volatile and can take a hit when stocks fall, but it takes more sustained declines to damage the fundamental strength of the economy.  Still, the media and Wall Street are good at exaggerating the downside.  And with that, we’ve had expectations on economic data (as well as the earnings data) dialed down.  That’s good, because it sets the table for positive surprises, and we had one this morning.

The fourth quarter GDP number came in hotter, at 2.6%.  The consensus view was for 2.3%.  So here’s what full year 2018 looks like …

Q1: 2.2%
Q2: 4.2%
Q3: 3.4%
Q4: 2.6%

This gives us an average annualized growth of 3.1%.  The average annualized growth coming out of the Great Recession (pre-Trumponomics) was just 2.2%.

Below is what that growth has looked like against the long-term trend growth, dating back to 1947 (long-term trend growth = 3.2%).

So, we are finally approaching trend growth in 2018.

What were the experts thinking as we entered last year?

The Fed and Wall Street were looking for 2.5% growth. They undershot.

For 2019, the Fed is looking for just 2.3% growth — that was adjusted down in their December projections as they were witnessing the sharp decline in stocks.  A Wall Street Journal poll of economists back in December also showed a 2.3% growth forecast for 2019.

Again, the bar has been set low.

With that in mind, consider this:  The next big pillar of Trumponomics is a trillion-dollar-plus infrastructure spend.

Just as expectations have been dialed down, this is where we could see a real economic boom kick in, especially if we get a deal on China (clearing that drag on sentiment).

We’re already well overdue for an economic boom period.  Forperspective, let’s revisit this look at growth following the Great Depression and growth following the Great Recession …