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Taking Stock: Second Quarter 2023 Executive Summary

Quarterly Executive Summary

Following a better-than-expected start to the year, we entered Q2 optimistic but facing a great deal of continued uncertainty.  Despite the challenges, markets remained resilient and finished the first half of 2023 strong.  In fact, by technical definition, we entered a Bull Market, with the S&P 500 rising more than 20% from its October low.  

During the first half of the year, most Americans believed that a recession was just around the corner (sort of the general consensus since mid-2022); however, with little indication that the economy is weakening, it appears we just might make that “soft landing” after all.  For all the hoopla and political brinksmanship, the debt ceiling crisis was anything but monumental.  Inflation has continued its downward trend (ending the quarter at 3%, down from 9% a year ago) and the Fed paused (or at least “skipped”) interest rate hikes.  The labor market has cooled but is showing resilience, and corporate earnings are coming in better than expected.  Retail sales are up.  Housing starts are up.  Overall, data indicates that the economy is on solid ground – certainly more so than expected.

Are we out of the woods?  Has the uncertainty cleared?  Does it matter?  Uncertainty seems to be the one constant in this unusual market/economy, and significant headwinds persist – expected additional rate hikes, earnings pressure, post-pandemic personal savings decline and a myriad of geopolitical concerns.   However, we see no cause to panic -- even if the U.S. does slip into a recession.  Recessions aren’t uncommon (happening about once every five years).   They are typically short-lived (average duration since WWII ~ 11 months), and historically they are followed by above-average market returns (S&P rose, on average, 15% following the end of recessions over the past 75 years).  

Overall, the economic vibe is more upbeat than we’ve experienced over the past year – investors have survived another full quarter without realizing their worst fears, and the more time that passes, the more optimistic investors become.  

Our philosophy has always been to create a solid plan, utilizing quality investments, and commit to it.  There will always be uncertainty.  There will always be unexpected twists, turns and varying levels of volatility.  We are confident that, with a well-devised plan that focuses on your long-term goals and objectives, the best strategy remains staying the course.     

"Uncertainty is the friend of the buyer of long-term values. – Warren Buffet


 Recent Economic Data: 

Gross Domestic Product (GDP).  The GDPNow model estimate for real GDP growth in Q2 2023 is 2.3% (seasonally adjusted annual rate; estimate released July 10, 2023).  Comparatively, GDP increased at an annual rate of 2.0% in Q1 2023 (estimate released June 29, 2023).  

Unemployment.  Total non-farm payroll employment increased by 209,000 in June, and the unemployment rate changed little at 3.6% (3.5% in March).  Wages rose 4.4% from a year ago, slightly higher than expectations.  Despite higher interest rates, the labor market remains tight.

Consumer Confidence.  The Conference Board Consumer Confidence Index, an indication of consumer attitudes and buying intentions, now stands at 109.7 (1985=100), an increase from 104.2 in March.  “Consumer confidence improved …to its highest level since January 2022, reflecting improved current conditions and a pop in expectations,” said Dana Peterson, Chief Economist at The Conference Board.  

Consumer Price Index (CPI).  The CPI for All Urban Consumers (CPI-U), a measure of inflation which shows “cost of living” fluctuations, increased 0.2% in June on a seasonally adjusted basis, and for 12 months ending June the CPI-U increased 3.0% before seasonal adjustments, a sharp reduction from June of last year when inflation spiked to 9.1%.

Earnings.  For Q2 2023, the estimated earnings decline for the S&P is -6.5%; however, future estimates may improve -- as of July 10, 2023, Q2 has the highest number of S&P 500 companies issuing positive EPS guidance since Q3 2021.  The estimated earnings decline for Q1 2023 is -3.7%, compared to the March estimate of -6.7%.  

Housing.  Despite higher mortgage rates, the housing market remains strong, with elevated demand and low inventory sustaining higher home prices.  Privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,631,000, more than 21% above the revised April estimate and almost 6% above the May 2022 rate.  Builders’ Confidence rose five points in June to 55, marking the sixth straight month of increases and the first time it has surpassed the midpoint of 50 since July 2022.  



June 30, 2023

Q2 Return







S&P 500




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Executive Summary Sources:























The views expressed represent the opinion of Asset Management Financial Solutions, Inc. (“AMFS”) and are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and AMFS’s view as of the time of these statements.  Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.