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Week In Review


U.S. GDP grew at an annualized 3.2% rate in the first quarter. Personal consumption grew 1.2%, while business investment increased 2.7%. The core personal consumption expenditures price index rose just 1.3%.

Our Take

The headline reading of 3.2% growth looks solid, but the mix of how the economy arrived at that measure paints a darker picture. Both personal consumption and business investment growth rates were approximately half of what they were in Q4 and added just 0.82% and 0.38% respectively to Q1 GDP. Most of the growth can be attributed to inventory buildup and net exports, neither of which can be counted on for sustainable growth. On the price front, readings continue to point to benign inflation. If consumers and businesses remain subdued, future GDP readings will fall. If this occurs, slower growth with weak inflation will force the Fed to consider rate cuts.


Wilshire Consulting released their annual report on state pension funding levels. Wilshire reported that at the end of fiscal year 2018 the funding ratio of state pensions was 72.2%. This is an increase from 2017, which reported 70.5%, and marks the second consecutive year of increases. Wilshire surveys and gathers data from 134 state-sponsored pension systems.

Our Take

While two years in a row of overall funding ratio increases is good news, each individual state’s funding ratio should be considered. There are certain states that have very high funding ratios, including Wisconsin, South Dakota, and Tennessee, along with certain states with very low funding ratios, including New Jersey and Illinois. States with low funding ratios must place a priority on pension reform and work to improve the fiscal health of struggling pensions.

All expressions of opinions are subject to change without notice in reaction to shifting market conditions. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice.