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Economy, Manufacturing Growing, Stocks Rise, Oil Prices Rise, Spirit Dies, and Pianos

  • Writer: Doug MacGray
    Doug MacGray
  • 1 day ago
  • 5 min read

May 3, 2026


U.S. GDP INCREASED AT 2.0% ANNUAL RATE IN FIRST QUARTER: The U.S. economy, as measured by gross domestic product (GDP), rose by a 2.0% annual rate in the first quarter of 2026. The largest contributor to growth was business investment in equipment and intellectual property. Personal consumption also fueled the positive number. Personal consumption, business fixed investment, and home building combined rose at a 2.5% annualized rate. So, the U.S. is not in recession, but neither is it booming.


OIL PRICES RISE: The Brent Crude Oil spot price ended the week at $124. Despite the volatility, oil prices had been moving down a bit for the last three weeks. That streak ended. We watch this closely because it is having a negative effect on inflation and consumer confidence. If it continues, it can affect the entire economy if it causes inflation to persist, sour consumers, and drive consumer spending and corporate earnings down.


AND THE RALLY CONTINUES: The Iran war did not escalate, and the two sides kept talking, although it seems an agreement remains elusive. That was enough to allow the U.S. stock markets to continue to rally. The real driver seems to be corporate earnings. Of the 314 S&P 500 companies that have reported their first quarter earnings, 83% have topped estimates, well above the historic average (67%). Last week, giants such as Alphabet (Google parent), Apple, Microsoft, Amazon, Meta, Caterpilar, Chevron and Coca Cola all reported earnings and all exceeded projected revenue forecasts except Chevron. Earnings growth for the first quarter are currently coming in at about 28%. Most economists are now forecasting an entire year of earnings above 20%. The average over the last ten years has been about 9%. This was the fifth straight week of S&P 500 gains.



LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.



THE FED MET AND KEPT INTEREST RATES THE SAME: Last week the Federal Reserve met, the last time chaired by Jerome Powell, and held its benchmark interest rate steady for the third straight meeting.

SPIRIT IS ENDING: While many economic data points look good, Spirit Airlines did not survive the oil price shock. There were talks with the Trump administration about a bailout, but a deal did not happen, and Spirit announced it was shutting down immediately. All flights have been cancelled and customer service is no longer available. Spirit had been struggling for a while. Before the COVID inspired government shutdowns, it was highly successful and profitable. It delivered industry-leading profit margins (11-15%) in 2015-2017 and stayed profitable through 2019. It has not reported a profit since. It tried to merge with Frontier in 2022, but the deal fell apart when JetBlue caused a bidding war. Spirit shareholders favored the JetBlue deal, but government regulators blocked the deal. Spirit has been bleeding cash since, and the latest fuel shock hastened its demise.

HOW EXPENSIVE ARE U.S. STOCKS?: The forward P/E ratio compares a company's current share price to its estimated future earnings per share over the next twelve months. One common way to determine if you are paying too much for a stock, or holding a stock that is too expensive, is to look at the forward P/E. Can future earnings sustain the stock's price? Below are the current forward P/E ratios for large cap, mid cap, and small cap using three ETFs that hold those stocks compared to the historical average. As you can see, large cap stocks are still a bit expensive, but that is not the case with mid cap and small cap stocks. By the way, while the S&P 500 (large cap stocks) are up 6.02% so far this year, MDY is up 10.4%, and SPSM is up 14.52%.



U.S. MANUFACTURING GROWS: The ISM Manufacturing Index came in at 52.7 in April, the same as the month before. Anything above 50 on this index indicates growth. 52.7 is the highest this index has been since 2022. This is the fourth straight month of expansion in the U.S. manufacturing sector.

GLOBAL FUEL PRICES: I visited Kampala, Uganda in 2022. The COVID scare was not quite over. I remember hearing accounts about people in the city of Kampala during the government shut downs. People in the countryside did okay. It is a country where crops grow fairly easily, and getting some food and nutrition to survive was not difficult outside of the city. (Below are pictures I took of a rural market in Uganda.) In the city, however, without any safety net, and with no ability to forage, people actually starved to death in their city apartments. We often look at these problems only from our perspective. Currently, we are paying significantly more for gasoline in the U.S. That is definitely a negative thing that causes real suffering and damage to many people and businesses. I just read an update from a nonprofit we support called Hope International, and it reminded me to broaden my perspective again. The update stated that the global fuel crisis is disproportionately impacting people in Burundi and Zimbabwe. People living in poverty in those countries are facing severe suffering. Poor households in those countries are reliant on informal work, day labor, subsistence farming, and markets. As such, these households bear the brunt of higher transport and food costs, reduced mobility and eroded purchasing power. In Zimbabwe, prices for food shot up 10% in March. In Burundi, prices for rice are currently 85% above average.



PIANO RECITAL TIME!: I heartily enjoyed sitting down to watch my two oldest grandchildren perform at their recital. It is great experience for them. They have to walk up to the microphone and introduce themselves and the music they will be playing, and then play in front of a large crowd. They did great. Yes, I had to watch dozens of other performances, but that's part of the whole experience.



Have a great week!


Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.



Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545



"The friend in my adversity I shall always cherish most. I can better trust those who helped to relieve the gloom of my dark hours than those who are so ready to enjoy with me the sunshine of my prosperity." Ulysses S. Grant*


"Whoever loves money never has enough; whoever loves wealth is never satisfied with their income." Ecclesiastes 5:10 (NIV)


*In commemoration of the 250th anniversary of the United States, I am finding a quote from a president each week, in order. This is the 18th week, and Ulysses S. Grant n was our 18th president.


SOURCES:

HOW EXPENSIVE ARE U.S. STOCKS?: Yardeni, Edward, et al. “Stock Market Briefing: Selected P/E Ratios.” Yardeni Research, 30 Dec. 2023, archive.yardeni.com/pub/stockmktperatio.pdf. AND van Doorn, Philip. “This Quality Approach to a Cheap Part of the Stock Market Garners a Five-Star Rating.” MarketWatch, 8 Apr. 2024, www.marketwatch.com/story/this-quality-approach-to-a-cheap-part-of-the-stock-market-garners-a-five-star-rating AND YCharts.com

GLOBAL FUEL PRICES: https://reliefweb.int/report/zimbabwe/zimbabwe-key-message-update-sharp-fuel-price-hikes-drive-further-reduced-poor-household-market-access-march-september-2026 AND https://www.zimbabwesituation.com/news/fuel-price-hike-worsens-food-crisis-for-vulnerable-zimbos/ AND https://fews.net/east-africa/burundi/food-security-outlook/february-2026 AND https://www.wfp.org/countries/burundi

SPIRIT IS ENDING: https://www.wsj.com/business/airlines/spirit-airlines-prepares-to-shut-down-as-rescue-deal-falls-apart-5a2d5936?mod=Searchresults&pos=5&page=1 AND https://www.spiritrestructuring.com/ AND https://www.newsnationnow.com/business/ap-business/ap-spirit-airlines-appears-closer-to-a-shutdown-as-time-dwindles-for-a-government-bailout/


(c) 2026 Anno Domini, Stonecrop Wealth Advisors, LLC, All Rights Reserved


Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.


SDG


*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.

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