"Q2 2023 - No Trespassing"

  • By: Joseph R. Tranchini, CFA, CFP®
  • August 2023








I swear… conducting economic research nowadays feels more like walking through a ‘No Trespassing’ zone rather than a genuine academic exercise. Why is that you may ask? Well, the reason is simple… we weren’t ‘supposed’ to be here.

We weren’t supposed to have an Economy growing at a pace of 2.4%. We weren’t supposed to still have historically low Unemployment. We weren’t supposed to be dealing with an improving inflationary situation. And yet, here we are, chugging right along on our merry way.

While those eternally pessimistic calls for the U.S. Economy’s downfall have been both numerous and unrelenting (and don’t worry, they will always be around for those looking for them) they have simply failed to materialize – time and time again. Frequent readers of our publications will note that we have adopted a much more optimistic view of the U.S. Economy over the past year, and our view remains well anchored in those beliefs today. Let’s take a look at some of the factors which could provide for additional economic growth to come.

Firstly, easing of aggregate inflationary pressures in recent months is a very positive development as it relates to the amount of discretionary disposable income that consumers possess. No, the fight against inflation is not quite over yet, but we have certainly come a long way (as is evidenced by incoming data). The benefit of lower prices can also be compounded when examined in tandem with the fact that wage growth has been robust in recent history. Combing higher wages and lower costs is a uniquely positive backdrop for the state of the consumer (who, by the way, is the lifeblood of the economy).

As just mentioned, wage growth has been higher than normal for some time now. The immediate benefit of this is obvious (more money), but I would like to take a moment and examine one very interesting ‘side-effect’ of this dynamic. As wage growth continues to remain elevated, expectations of future earnings continue to rise right along with it. This is a very interesting dynamic between wage growth and expectations, as there exists an economic concept known as the ‘Wealth Effect’ which roughly posits that as individuals feel wealthier and adopt ‘rosier’ expectations of what they may earn in the future, their consumption levels increase (a particularly beneficial development for economic growth).

Additionally, another noteworthy aspect of the current economic environment pertains to the notion that we are currently living in the midst of an inflection point for one of the more multiplicative and permeating industries – artificial intelligence and advanced computing. What used to be theoretical in this realm has now become practical, and as that transition has continued to take place enormous investment (and subsequent job creation) has taken place to accommodate the larger shoes the future is likely to fill. Again, in keeping with examining the concept of direct and indirect benefits of this secular force, the direct benefits are straightforward – more powerful and effective tools to get things done. In and of itself, that is more than enough to be excited about; but wait, there’s more. The indirect benefits of this force may even be larger in scale. Think of this, more computing power requires more components which require more jobs to produce. This triggers more need for raw materials for component creation, thus creating more jobs. New technologies require new/advanced skill sets, this creates more jobs. So on and so forth, you see my point.

As is customary, there are always going to be risks present that pose threats and uncertainty to future economic growth. My broader point is this, to limit one’s economic viewpoints to only those worrisome factors is remarkably myopic in nature and drastically understates the true underlying strength of the various positive economic factors that fuel the everyday of the U.S. Economy.

So, next time you get that eerie ‘trespassing’ feeling of ‘we weren’t supposed to be here’, consider this…. maybe this is the only place we were actually meant to be. Until next time.


[See Below for Disclosures & Annotations]


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

The companies presented here are for illustrative purposes only and are not to be viewed as an investment recommendation.

Tax laws and regulations are complex and subject to change, which can materially impact investment results. LPL Financial does not provide tax advice. Clients should consult with their personal tax advisors regarding the tax consequences of investing.



  1. FactSet. “Economics – Country/Region – United States”. August 4, 2023.
  2. Bureau of Economic Analysis. “Gross Domestic Product, 2nd Quarter and Year 2023 (Advance Estimate)”. August 4, 2023.
  3. Bureau of Economic Analysis. “Labor Force Statistics from the Current Population Survey”. August 4, 2023.
  4. Bureau of Economic Analysis. “Personal Income”. August 4, 2023.
  5. FRED. “5-Year Breakeven Inflation Rate”. August 4, 2023.
  6. FRED. “10-Year Breakeven Inflation Rate”. August 4, 2023.