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A Time to Be Thankful

By Rod Smyth


  • Inflation has been trending down over the past year.
  • Unemployment is very low.
  • The S&P 500 has had a positive trend this year, so far.
  • We have much to be thankful for.

This Thanksgiving, as we reflect on the economy and markets, there is much to be thankful for:

Inflation is Lower

A year ago, the headline inflation rate was 7.1% and just starting to roll over. As of last month, it is 3.2% (see chart below) and continues a downward trajectory. Over the next year, the debate will be whether inflation can continue to fall closer to the Federal Reserve’s target of 2% and whether, if it stabilizes between 2% and 3%, the Fed will decide no more rate hikes are warranted. Broadly, we think that is the case.

Source: LSEG Datastream, RiverFront. Data monthly through October 13, 2023. Chart above shown for illustrative purposes.

The Economy is Growing

The Atlanta Fed makes a dynamic forecast of economic growth for the current quarter using incoming data. We have found it to be a remarkably good real-time indicator and especially useful as their series is produced monthly. A year ago, financial markets were concerned about a recession in 2023. The reality has been much better, with the growth rate so far in 2023, higher than in 2022. We think the economy is unlikely to fall into recession for the calendar year 2024, though we think a small decline is possible in the 4th quarter. This is even more remarkable given the magnitude of the rise in interest rates.

GDPNow Forecast Q4 2023 US Real GDP Growth

Source: LSEG Datastream, RiverFront. Data weekly through November 17, 2023. Chart left shown for illustrative purposes.

Unemployment is Very Low

The latest unemployment rate is just 3.9%, only fractionally higher than a year ago and one of the lowest rates in the last 50 years. The Fed has a dual mandate of inflation and unemployment. Although their focus has been squarely on inflation over the last year, we surmise they must be feeling fortunate that the former is falling without the latter rising. In our view, we do not see a significant rise in 2024.

Unemployment Near 30 Year Low

Source: LSEG Datastream, RiverFront. Data monthly through October 13, 2023. Chart right shown for illustrative purposes.

Stocks Have Turned Up Again

A year ago, the S&P 500 was around 4000 and is now 4500; including dividends, this represents a total return of over 15%. While the index has yet to eclipse its 2022 high, as we wrote last week in our Weekly View, the primary trend (slope of 200 day moving average – red line below) continues to be positive, which we regard as a good omen for 2024.

Domestic Trend Rising

Source: Bloomberg, RiverFront. Data daily through November 24, 2023. Chart left shown for illustrative purposes. An investment cannot be made directly In an Index.

Savers are Being Rewarded

The rise in interest rates has been dramatic and has resulted in a tough bear market for bonds. From its low, the bear market was made worse because yields fell so low in 2020, with the 10-Year Treasury yield below 1%. Over the last year 10-year yields have been up but returns are positive as the yield has more than compensated for the decline in price. Furthermore, savers are now being rewarded with interest rates high in absolute terms, and now above the rate of inflation.

US 10 Year Treasury Yields 2015-Present

Source: LSEG Datastream, RiverFront. Data weekly through November 23, 2023. Chart right shown for illustrative purposes. An Investment cannot be made directly in an index.

While we are thankful for these market-related positives, we are especially thankful to the Financial Advisors and clients who trust us to be good stewards of the assets we manage. You are always our number one priority, and we never take that trust for granted. We hope you all enjoyed the Thanksgiving holiday.

Risk Discussion: All investments in securities, including the strategies discussed above, include a risk of loss of principal (invested amount) and any profits that have not been realized. Markets fluctuate substantially over time, and have experienced increased volatility in recent years due to global and domestic economic events. Performance of any investment is not guaranteed. In a rising interest rate environment, the value of fixed-income securities generally declines. Diversification does not guarantee a profit or protect against a loss. Investments in international and emerging markets securities include exposure to risks such as currency fluctuations, foreign taxes and regulations, and the potential for illiquid markets and political instability. Please see the end of this publication for more disclosures.

Important Disclosure Information: 

The comments above refer generally to financial markets and not RiverFront portfolios or any related performance. Opinions expressed are current as of the date shown and are subject to change. Past performance is not indicative of future results and diversification does not ensure a profit or protect against loss. All investments carry some level of risk, including loss of principal. An investment cannot be made directly in an index. 

Information or data shown or used in this material was received from sources believed to be reliable, but accuracy is not guaranteed. 

This report does not provide recipients with information or advice that is sufficient on which to base an investment decision. This report does not take into account the specific investment objectives, financial situation or need of any particular client and may not be suitable for all types of investors. Recipients should consider the contents of this report as a single factor in making an investment decision. Additional fundamental and other analyses would be required to make an investment decision about any individual security identified in this report.  

Chartered Financial Analyst is a professional designation given by the CFA Institute (formerly AIMR) that measures the competence and integrity of financial analysts. Candidates are required to pass three levels of exams covering areas such as accounting, economics, ethics, money management and security analysis. Four years of investment/financial career experience are required before one can become a CFA charterholder. Enrollees in the program must hold a bachelor’s degree.

All charts shown for illustrative purposes only. Technical analysis is based on the study of historical price movements and past trend patterns. There are no assurances that movements or trends can or will be duplicated in the future.

Stocks represent partial ownership of a corporation. If the corporation does well, its value increases, and investors share in the appreciation. However, if it goes bankrupt, or performs poorly, investors can lose their entire initial investment (i.e., the stock price can go to zero).  Bonds represent a loan made by an investor to a corporation or government.  As such, the investor gets a guaranteed interest rate for a specific period of time and expects to get their original investment back at the end of that time period, along with the interest earned. Investment risk is repayment of the principal (amount invested). In the event of a bankruptcy or other corporate disruption, bonds are senior to stocks.  Investors should be aware of these differences prior to investing.

In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa). This effect is usually more pronounced for longer-term securities). Fixed income securities also carry inflation risk, liquidity risk, call risk and credit and default risks for both issuers and counterparties. Lower-quality fixed income securities involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Foreign investments involve greater risks than U.S. investments, and can decline significantly in response to adverse issuer, political, regulatory, market, and economic risks. Any fixed-income security sold or redeemed prior to maturity may be subject to loss.

Index Definitions:

Standard & Poor’s (S&P) 500 Index measures the performance of 500 large cap stocks, which together represent about 80% of the total US equities market.


The Consumer Price Index (CPI) measures the monthly change in prices paid by U.S. consumers. The Bureau of Labor Statistics (BLS) calculates the CPI as a weighted average of prices for a basket of goods and services representative of aggregate U.S. consumer spending.

The Federal Reserve Bank of Atlanta is one of 12 Federal Reserve Banks, and represents the sixth district in the U.S. Its territory includes the states of Alabama, Florida, Georgia, as well as portions of Tennessee, and the southern counties of Mississippi and Louisiana. The bank maintains branch offices in Birmingham, Jacksonville, Miami, Nashville, and New Orleans. The bank has developed two widely used economic tools: the GDPNow and the Wage Growth Tracker.

The GDPNow is a running estimate of real gross domestic product (GDP) growth during the current quarter, as opposed to the official GDP numbers which are released by the U.S. Bureau of Economic Analysis (BEA) with a significant delay that can impact policy decisions. As such many market participants closely follow the GDPNow estimates.

The 200-day moving average is a popular technical indicator which investors use to analyze price trends. It is simply a security’s average closing price over the last 200 days.

Treasury bond yields (or rates) are tracked by investors for many reasons. The yields are paid by the U.S. government as interest for borrowing money via selling the bond. The 10-year Treasury yield is closely watched as an indicator of broader investor confidence. Because Treasury bonds (along with bills and notes) carry the full backing of the U.S. government, they are viewed as one of the safest investments.

RiverFront Investment Group, LLC (“RiverFront”), is a registered investment adviser with the Securities and Exchange Commission. Registration as an investment adviser does not imply any level of skill or expertise. Any discussion of specific securities is provided for informational purposes only and should not be deemed as investment advice or a recommendation to buy or sell any individual security mentioned. RiverFront is affiliated with Robert W. Baird & Co. Incorporated (“Baird”), member FINRA/SIPC, from its minority ownership interest in RiverFront. RiverFront is owned primarily by its employees through RiverFront Investment Holding Group, LLC, the holding company for RiverFront. Baird Financial Corporation (BFC) is a minority owner of RiverFront Investment Holding Group, LLC and therefore an indirect owner of RiverFront. BFC is the parent company of Robert W. Baird & Co. Incorporated, a registered broker/dealer and investment adviser.  

To review other risks and more information about RiverFront, please visit the website at riverfrontig.com and the Form ADV, Part 2A. Copyright ©2023 RiverFront Investment Group. All Rights Reserved. ID 3251458

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