{"id":477,"date":"2019-01-16T22:42:56","date_gmt":"2019-01-16T22:42:56","guid":{"rendered":"https:\/\/kempnercapital.com\/?page_id=477"},"modified":"2019-01-17T23:14:20","modified_gmt":"2019-01-17T23:14:20","slug":"4th-quarter-2018-letter","status":"publish","type":"page","link":"https:\/\/kempnercapital.com\/4th-quarter-2018-letter\/","title":{"rendered":"4th Quarter 2018 Letter"},"content":{"rendered":"
KEMPNER CAPITAL MANAGEMENT, INC.
\n<\/strong><\/strong>January 9, 2019<\/strong>
\n
By: Harris L. Kempner, Jr.<\/i>
\n
<\/div>\nDespite some considerable difficulties for the U.S. and the world economy, we do not expect a U.S. recession in 2019. However, due to those many difficulties, we expect a general slow-down in U.S. growth for this year. In 2018, we enjoyed 3%+ real GDP growth.\u00a0 In 2019, we expect about 2% real GDP growth, with growth gradually slowing through the year.The reason for this relatively optimistic forecast rests on the U.S. consumer. I want to remind you that 70% of the U.S. economy is consumer based. At this point, more people are working, and fewer are unemployed than has been true for the last 10 years.\u00a0 There have been wage increases averaging 3+%, which are the highest in 15 years. It looks like this will continue on balance through 2019. In addition, 2.64 million jobs were created in 2018, which is quite substantial. Further, income tax refunds for individuals, if we believe they can be paid, will also give a substantial positive jolt to the U.S. consumer in the early months of 2019. \u00a0So, the largest part of the U.S. economy is the strongest.\u00a0 We believe it\u2019s enough to overcome the negatives in other areas.<\/p>\n

And there are <\/u>negatives.\u00a0 Worldwide, there is a slowing in the economy of both Europe and China. China, in particular is paying the price of the Trump trade wars because the tariffs are starting to cut into their ability to export, causing business to slow.\u00a0 Unless resolved by March 1st<\/sup>, the tariffs will become much worse, rising from 10% on many items to 25%, with the possibility of being expanded by another $250 billion.\u00a0 Under those circumstances, China could have zero growth next year and the world economy would suffer.<\/p>\n

Corporate America has also shown a gradual slow-down.\u00a0 We believe the primary cause to be reductions in capital investments.\u00a0 The tax boost occurred in 2018 and will have much less effect in 2019.\u00a0 Again, the trade war is beginning to affect investment and production in the United States due to the increasing price of imported goods, which are needed as inputs to manufacturing.\u00a0 As a result, toward the end of 2018, six different U.S. manufacturing indexes dropped substantially \u2013 a statistical sign of industrial weakness which has rarely been seen in the United States. \u00a0Corporate, industrial America is likely to stagnate until trade issues are fully<\/u> resolved, not just with promises, but with signed treaties, etc.<\/p>\n

The Federal Reserve is currently somewhat tight, though the most recent speech by Chairman Powell holds some hope out that they\u2019re not on autopilot as far as rate increases in 2019.\u00a0 We will see how this works out but they seem to be somewhat more responsive than feared as far as the economy is concerned.<\/p>\n

And, once more, we\u2019re facing possible debt ceiling violations in September 2019.\u00a0 That would be a disaster for the U.S. economy as we have stated before. Hopefully, even this divided Congress and Administration will be sensible enough to avoid that problem.<\/p>\n

However, we think that the strength of the consumer, which is 70% of the U.S. economy, is enough to overcome government shut-downs, weakness in China and Europe, corporate difficulties and any other fiscal matters that slow down the U.S. economy. \u00a0We believe a recession will be avoided in 2019. \u00a0However, we are definitely keeping our eye cocked on 2020.<\/p>\n

 <\/p>\n

 <\/p>\n<\/div>\n

 <\/p>\n

\n

Past Letters<\/p>\n

3rd\u00a0Quarter 2018<\/a><\/p>\n

2nd\u00a0Quarter 2018<\/a><\/p>\n

1st Quarter 2018<\/a><\/p>\n

4th Quarter 2017<\/a><\/p>\n

3rd Quarter 2017<\/a><\/p>\n

2nd Quarter 2017<\/a><\/p>\n

1st Quarter 2017<\/a><\/p>\n

4th Quarter 2016<\/a><\/p>\n

3rd Quarter 2016<\/a><\/p>\n

2nd Quarter 2016<\/a><\/p>\n

1st Quarter 2016<\/a><\/p>\n

4th Quarter 2015<\/a><\/p>\n

3rd Quarter 2015<\/a><\/p>\n

2nd Quarter 2015<\/a><\/p>\n

1st Quarter 2015<\/a><\/p>\n

<\/div>\n

1st Quarter 2014<\/a><\/p>\n

2nd Quarter 2014<\/a><\/p>\n

3rd Quarter 2014<\/a><\/p>\n

4th Quarter 2014<\/a><\/p>\n

<\/div>\n

4th Quarter 2013<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

KEMPNER CAPITAL MANAGEMENT, INC. January 9, 2019 By: Harris L. Kempner, Jr. Despite some considerable difficulties for the U.S. and the world economy, we do not expect a U.S. recession in 2019. However, due to those many difficulties, we expect … Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"page-fullwidth.php","meta":{"footnotes":""},"_links":{"self":[{"href":"https:\/\/kempnercapital.com\/wp-json\/wp\/v2\/pages\/477"}],"collection":[{"href":"https:\/\/kempnercapital.com\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/kempnercapital.com\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/kempnercapital.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/kempnercapital.com\/wp-json\/wp\/v2\/comments?post=477"}],"version-history":[{"count":3,"href":"https:\/\/kempnercapital.com\/wp-json\/wp\/v2\/pages\/477\/revisions"}],"predecessor-version":[{"id":485,"href":"https:\/\/kempnercapital.com\/wp-json\/wp\/v2\/pages\/477\/revisions\/485"}],"wp:attachment":[{"href":"https:\/\/kempnercapital.com\/wp-json\/wp\/v2\/media?parent=477"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}