Monthly Market Commentary

The Economy is the Stronger Signal

Fact:

• In the 12 months following a midterm election, the S&P 500 has been up 15% on average, historically.
• Since 1950, every 12-month period following the midterms has had a positive return.

U.S. gross domestic product grew at a 3.4% annualized pace in the third quarter, accelerating from 2.2% in the second quarter. Business investment led the way as the artificial intelligence buildout continues and steady consumer spending provided additional support. Our Recession Dashboard tells a similarly resilient story. 11 of its 12 indicators are flashing expansionary green, with no changes in October, a reading that implies recession odds of only 15% over the next 12 months.

We use 12 different economic indicators to assess the risk of recession.

Each individual indicator can signal expansion, caution or recession in this economy. The signals from each of the 12 indicators are combined into an overall dashboard signal.

The indicators, signals and changes are based on our interpretation of the data. The dashboard is not a crystal ball, but can serve as a tool to evaluate the risk of recession in the U.S. economy.

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Economic Growth Remains Strong in the United States

Consumers remain resilient. We have heard this on most earnings calls the past couple of weeks. The main takeaway has been that the consumer is healthy and supported by a strong labor market, even amid higher gas prices in Q3. Retail sales for September increased 0.8% month-over-month (m/m), versus market expectations of 0.3%, bringing the year-over-year increase to 6.3%,

Initial jobless claims, reported last Thursday, came in slightly below expectations again, and the 4-week average remains below 200,000. This data supports our belief that the labor market remains strong. The September unemployment rate (reported on October 2) was 4.2%.

(+) Solid economic data the last couple days. September JOLTs Job Openings hit a 4-mo high, Layoffs declined. In addition, Factory Orders beat estimates, following yesterday's roundly better ISM Manufacturing data. Production, Inventory, and New Orders were all solid and Prices Paid came down a bit. Positive all around and firmly in expansion mode.

"And obviously, we've continued to see the industrial economy with positive ISM through the year. It's been in, kind of, the low to mid-50s, but it's been in expansion territory. So that's been good." - Trucking company Old Dominion Freight Line CFO Adam Satterfield

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Inflation Outlook

Global price pressures rebounded for the first time in 5 months amid the ongoing war in the Middle East and strong AI-related demand worldwide. A surge in energy and transport costs accounted for most of the increase in September, while higher semiconductor and electrical equipment prices also contributed, albeit less than in the prior month.

Led by higher gasoline and other energy prices, the headline U.S. Consumer Price Index (CPI) jumped the most in 6 months. Importantly, the core CPI, which excludes energy and food, also surprised to the upside, the most since April. Higher inflation is eroding consumer purchasing power, as real average hourly earnings continued to decline in September both from the prior month and from a year ago. The upward inflation surprise means that the Federal Open Market Committee (FOMC) will likely maintain a hawkish stance and deliver another rate hike by the end of the year.

Additional Charts

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Helpful Resources

View our Economic Market Minutes: https://www.gocgo.com/market-minute

Financial Planning Webinars: https://www.gocgo.com/market-minute

Firm Website: https://www.gocgo.com/financial-planning-and-wealth-management

Investor Blog: https://www.commonfinancialsense.com/ 

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April 2026 Commentary

Disclosures & References

Investment Advisory Services offered through Global Retirement Partners, LLC DBA Connor & Gallagher OneSource, an SEC registered investment advisor.

1-6 All data referenced in the table and comments supplied by Morningstar.

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