Macro & Market Musings are weekly insights on Growth, Inflation, Policy and Looking Ahead from Annex Wealth Management’s Chief Economist, Brian Jacobsen. Brian, a frequent contributor on CNBC and Fox Business News, hosts regular updates on the economy and markets. Check our events page for Brian’s next live event.

Growth: Signs of slowing, not stopping
Third quarter growth for the overall economy was pretty good. It was good, not great, but 2.8% annualized growth is nothing to sneeze at. The problem is that about half of the gains look to be coming from a “bounce back” from weak goods spending in the first quarter. Services sector strength is still there, but it is diminishing. Artificial Intelligence spending strong, but it’s just not big enough compared to a roughly $30 trillion economy to do the heavy lifting.

Inflation: A long and winding road
The road to 2% inflation is a long and winding one. We’re likely going to see 2% inflation soon, but we’re also likely to see it move higher and then lower again and a again. Getting to a sustainable 2% rate of inflation with small deviations around it is still off in the distance.

Policy: Polls versus predictions
Polls of voters show a very close race. Prediction markets have a high probability of Trump winning. What gives? Are polls rigged? Are prediction markets manipulated? A less nefarious explanation is that polls and prediction markets are answering two very different questions. Polls show the expressed intentions of the people being surveyed. Prediction markets are betting on who will win. If the prediction market is extremely confident that one candidate will win by a razor-thin margin, a win is still a win regardless of the margin. Polls and predictions can–and have been–wrong, but they’ve also been right. The apparent gap between the two simply stems from them answering two different questions.

Looking ahead: Breakout or breaking down?
As we approach the election, Americans typically think that if their candidate wins we’ll see happy days again while if their candidate loses it’s going to be a winter of discontent. Markets often have a relief rally in November, but especially December, once the uncertainty of the outcome resolves. Then we can focus more on how policies might change and how that might affect the fundamentals of the businesses we invest in. When there are diverse outcomes possible, that’s a pretty strong argument for being patient and maintaining a diversified portfolio.