Key Takeaways
- Economic growth is stronger than headline GDP suggests. Private sector activity currently outpaces GDP, which has been dragged down by net exports.
- The labor market is tight, not strong. Worker scarcity should keep jobs growth cooling and unemployment low. » Inflation likely peaked in May. Led by fading energy costs and cooling housing inflation, current levels support a pause by the U.S. Federal Reserve.
- Weak inflation-adjusted income growth remains the key risk flag. Though not enough to turn our outlook cautious, income growth is a concern.
- Corporate earnings are a bright spot. With 2026 S&P 500 Index earnings growth tracking above 24% and estimates being revised up, corporate earnings are solid.
- Our positioning remains overweight equities and emphasizing the U.S. Our equity tilts include health care services, industrials, regional banks, and…
