Unemployment has steadily fallen since the financial crisis while inflation has remained around 2%, allowing the Federal Reserve to maintain low interest rates. While rates have increased recently, monetary policy remains accommodating. Unemployment and wage growth trends have converged, with wages gradually rising as unemployment falls. However, real wage growth remains low. GDP growth has been consistent and within the range desired for long-term economic health. Looking ahead, the market will weigh the prospects for continued low inflation, steady growth, and a benign interest rate environment.

1. Market Perspective – March 2019
Experience Insight Impact
Overview: With the current bull market having celebrated its 10th anniversary this month, we
reflect on the broad themes which have driven and continue to drive stocks higher. Investors
have repeatedly echoed the phrase “Goldilocks” to describe the past decade. Economic
conditions have exhibited growth which is “not too fast, not too slow, but just right,” allowing
inflation to remain benign and, accordingly, interest rates to stay low. This month we explore
these characteristics.
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2. Stable Prices, Low Unemployment
Experience Insight Impact
The above chart demonstrates that since the financial crisis, unemployment has steadily fallen
and inflation has remained low, roughly around the Federal Reserve’s target of 2%.
Source: Bloomberg
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3. Low Inflation Generally Allows Interest Rates to Remain Low
Experience Insight Impact
Because inflation remains low, Federal Reserve policy makers maintained low interest rates for many years. While
recently rates have creeped higher, this “normalization” may be winding down and Fed policy remains accommodating.
Source: Bloomberg
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4. Convergence of Unemployment & Wage Trends
Experience Insight Impact
Unemployment continues to trend lower and wage growth is only gradually increasing. So far, the
Federal Reserve has not been overly concerned.
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Source: Bloomberg

5. Real Wage Increases Remain Stubbornly Low
Experience Insight Impact
While we have seen some recent signs of improvement, real wage inflation, a particularly
important barometer watched by the Federal Reserve, remains subdued.
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Source: Bloomberg

6. GDP Growth Remains Reasonable
Experience Insight Impact
U.S. GDP growth remains fairly consistent and within a desired range of long-term growth.
Source: Bloomberg
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7. Market Perspective – March 2019
Experience Insight Impact
Conclusion: While no investor can predict the future, looking through a historical lens can provide
valuable perspective. In this case, market participants are weighing the future likelihood of low
inflation and sustainable economic growth with a relatively benign interest rate environment. We
are closely monitoring developments in this aging bull market for signs of change and will react
accordingly.
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8. Disclaimer
Experience Insight Impact
Opinions expressed in this commentary may change as conditions warrant and is for informational
purposes only. Information contained herein is not intended to be personal investment advice for
any specific person for any particular purpose. We utilize information sources that we believe to
be reliable but cannot guarantee the accuracy of those sources. Past performance is no guarantee
of future performance; investing involves risk and may result in loss of capital. Consider seeking
advice from a professional before implementing any investing strategy.
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