Lorence & Vander Zwart is a wealth management firm located in beautiful downtown Holland, Michigan. LVZ is a registered investment advisory firm managing wealth for individuals, trusts, corporations and retirement plans.
As a third party money manager, LVZ provides the ability for advisors and clients to customize and control their investment portfolios on a wide range of investment platforms.
In spite of headlines pointing to emerging signs of recovery, the economy continues to perform poorly. The charts below show longer-term trends in the two factors contributing to real growth—productivity and hours worked.
Jobs and hours worked are a poor guide to the economy’s health. More important is productivity which determines living standards.
Historically, US productivity growth has averaged 2.2% a year. At this pace, living standards double every 33 years. Whenever the US has abandoned classical economic principles, productivity growth has slowed. When it restores those principles, productivity improves.
An anemic economic recovery hasn’t prevented stock prices from reaching new all-time highs. One reason stocks have done well is because earnings have continued to grow. In spite of the economy’s slump, earnings for S&P 500 companies have continued to increase at a 6.5% yearly rate.
While the future direction of stock prices will depend on earnings and interest rates, any projection of the market’s future should begin with an assessment of its current value.
