The Pulse on the Economy and Capital Markets: May 8-12, 2023 

May 17, 2023

To Summarize: The stock and bond markets have been mixed but remain resilient despite concerns regarding regional banks and tighter lending standards. While economic data cools, consumers continue to spend on travel and leisure at an impressive rate. We unpack this and more in the May edition of The Pulse.

In the Markets: Equity and bond markets kick off May with mixed results, but quarter-to-date and year-to-date data remain positive. In May, most equity markets have declined marginally, while the Nasdaq, led by large technology companies, is higher. A reason for this resiliency is that corporate earnings surpassed expectations at a higher rate than in the previous five quarters. However, we are seeing struggles in the commodities market as fears of slowing demand has led to declines. 

Economic Data Cools: As global economies normalize towards pre-COVID conditions, the US economy is experiencing a slowing growth rate. Recent economic data is trending down with just a 1.1% annual growth rate. The slowing economy is impacting consumer segments differently, specifically for lower income consumers who are showing signs of stress.

Travel and Leisure Dominate: Even as the economy slows, consumers account for about 70% of the spending and they are choosing to spend on experiences, such as travel and leisure. American Airlines, Norwegian Cruise Line and the Royal Caribbean are showing an incredibly robust performance indicating that the desire to travel is here to stay, and so are higher prices. On the flip side, all the spending on travel is at the expense of buying goods. 

Top Headlines: We’re reading about how tech companies are focused on doing more with less, landlords face rising vacancies, US construction jobs are fueling recovery hopes in the housing market and Meta announces generative AI features for advertisers. 

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About the Author

Simeon Wallis

Simeon is the Chief Investment Officer of Aprio Wealth Management and the Director of Aprio Family Office. Simeon brings two decades of professional investing experience in publicly traded and privately held companies, as well as senior-level operating and strategy consulting experiences.