Fundamentals continue to support steady but moderate economic growth in 2019. That said, progress on trade is central to our growth projections, so we’ve slightly reduced our gross domestic product (GDP) forecast to 2.25–2.5%. Here we share our domestic and global economic growth outlooks for the second half of this year, featuring content from our just-released Midyear Outlook 2019.

U.S. Economy

The U.S. economy grew at 3.1% in the first quarter as domestic demand held up well in the face of a government shutdown and trade headwinds. Consumer spending was a modest contributor to GDP, while business investment sl

The LPL Research Midyear Outlook 2019: FUNDAMENTAL: How to Focus on What Really Matters in the Markets is here to provide economic and market guidance as well as investment recommendations to help us navigate the second half of 2019.

LPL Financial Research believes that even as investors face prospects for periodic bouts of volatility, emphasizing fundamentals will remain critical for making effective investment decisions. LPL Financial Research’s Midyear Outlook 2019 provides updated views of current fundamentals and factors that should persist as shorter-term concerns fade, and emphasizes four primary pillar

A potential rate cut may give stocks a lift. Stocks have benefited recently from increasing hopes of a Federal Reserve (Fed) rate cut, pulling the S&P 500 Index back to within 2% of its record high set on April 30, as of June 14. On June 4 Fed Chair Jay Powell signaled a possible cut by saying “we will act as appropriate to sustain the expansion,” and since then, as of Friday, June 14, 2019, the S&P 500 is up 5.4%. The central bank’s verbal pivot, partly an acknowledgement that they must be ready to offset trade tensions, has pushed the odds of a rate cut in July from roughly 60% to 86%, based on the fed fund futures

These next two weeks are pivotal for the global economy. The Federal Reserve’s (Fed) next policy meeting starts June 18 with a policy announcement due June 19. In the following week, global leaders will convene at the G-20 Summit in Japan, and we’ll likely get clues on the state of the U.S.-China trade talks.

Fed fund futures are pricing in about a 20% chance of a rate cut at the upcoming meeting [Figure 1]. We think a rate cut could be in play later this year if global conditions deteriorate, but a policy change at this next meeting may be too soon. Regardless, Fed commentary on the state of the economy and policy ha