Q2 2026 - What the Numbers Truly Mean for Investors

We're coming off the heels of our quarterly economic update (which you can watch here) at Vision Based Planning, and we wanted to share the rundown with those who missed it the opportunity to catch up on what's going on in the world. 

US Economic Landscape

The Good

Despite what you may hear every day on the news, the US economy is actually fairing quite well and has been for some time. The quarter began with continued strength in the U.S. labor market. Job openings remain elevated at 6.9 million, well above the long‑term average of 5.7 million. Despite headlines about layoffs, the broader trend remains stable and supportive of consumer spending. Unemployment sits at 4.3 percent, below both the 30‑year and historical post‑WWII averages. While individual experiences vary, the national trend remains healthy. GDP growth remains on its long‑term +2% trend, signaling steady economic health. Corporate earnings continued to rise throughout the early part of this year, and that matters more than you might think. Historically, 90 percent of market returns come from earnings growth and dividends, which is why focusing on the fundamentals is key to long‑term investing. Price movements are noisy and will have a lot of people talking you ear off about how they know the next big thing or how they just missed out. It's earnings that act as the signal.

The Concerning

Raise your hand if you felt inflation recently. Now keep them up if you felt it at the gas station. Inflation had slowed down significantly from its 2022 peak, but we all experienced the spike following the start of the Iran War, particularly with energy prices. Inflation across March and April were 3.3% and 3.8% respectively, a +0.9% and 1.4% increase compared to where we had been across January and February. Even before the war had started, households still felt inflation was encroaching. We're keeping tabs on the Federal Reserve and what their next actions may be. When inflation moves unpredictably, there is value in having a structured process in your portfolios to remain focused on your long‑term goals.

International Markets

Global labor markets remained healthy, with 26.4 million job openings in developed markets and more than 18 million in emerging markets. Emerging market openings are running 20 percent above average, a sign of continued economic expansion. Unemployment rates across both developed and emerging regions sit below long‑term trends.

International equity prices slightly declined at the start of the Iran War, but earnings continued to rise. This disconnect between price and earnings could create opportunity for investors. The price is just the number today. The earnings is the trajectory. Another reason why unemotional, research‑driven decision‑making is essential.

Valuations remain compelling overseas. With the S&P 500 trading at a price‑to‑earnings ratio of 21x and international markets at 14.8x, global allocations offer attractive entry points without abandoning the strength of U.S. markets. This supports the idea of having a globally diversified portfolio.

Inflation trends were also encouraging. Emerging market inflation had fallen 50 percent from its peak, and advanced economies saw a two‑thirds decline. GDP growth remains strong, with emerging markets growing at 4.2 percent and developed markets at 1.8 percent, right on trend.

Interest Rates and Policy

Despite the pressures and desires of some, global central banks, including the Federal Reserve, Bank of England, and European Central Bank, are not signaling rate cuts. Rising energy prices and geopolitical uncertainty are keeping policymakers cautious. We're keeping an eye on the central banks' actions. 

The Hit Points:

Across U.S. and international markets, there is some concern regarding inflation and the Iran War is still an ongoing issue. However, the numbers indicate that both U.S. and international are strong and staying the course.

• Labor markets remain strong
• Corporate earnings are rising
• Central banks remain cautious but steady
• Inflation is picking up, with energy as the main culprit
• GDP growth is stable
• International valuations are attractive

These conditions highlight that it's not all doom and gloom. It's important that investors stay steady, align their portfolios to their goals, and focus on the facts. Not the noise permeating through the news.

I hope I was able to shed some light for you into the murkiness that can be the world and all its moving parts. If you have any questions about the economy or this article, feel free to out to our team at service@visionbasedplanning.com or text us at 713-338-0401.

Thanks for reading and take care!