Strong corporate earnings growth continues to propel global stock markets upward. In the US, earnings growth for the S&P 500 manifests the strong upward trend: 2016 Q3 earnings growth rose by 3.1% compared to the same quarter in 2015; 2016 Q4 earnings growth rose by 4.9% compared to 2015 Q4; and 2017 Q1 earnings growth rose by 14.0% over Q1 for 2016. This 14% growth is the highest since 2011 Q3 at 16.7%.
June 23 marked the one year anniversary of the BREXIT vote. With a surge of resilience, economic activity in the UK and broader Europe has been remarkably strong, stocks have recovered, and UK real estate prices are up. Europe benefits from 16 straight quarters of economic growth, and reduced political uncertainty with the pro-EU election results in France and the Netherlands.
We are experiencing a synchronized global recovery with earnings growth creating a compounding effect between nations and a momentum to keep growing. Whenever one economy grows stronger, it helps pull up other economies, as if adding a strong player to a team or introducing a better student to a classroom. The price of stocks (valuations) are more attractive in Europe and emerging markets. International and emerging market stocks represent the greatest potential because valuations are less stretched and profitability gains have further to run. We have increased our allocation to foreign markets to take advantage of this trend.
In our Stable Growth Strategy, which incorporates our Total Return Funds (Class 4) and our Bond Funds (Class 5), the best performers for the first half of this year are funds that emphasize technology and international stocks. The bond funds we are using for Stable Growth and Cash Reserves are all positive year-to-date, and the municipal tax-free funds have performed even better than the taxable bonds.
With this global, positive momentum, and the risk of a US recession remaining low, it is likely that these economic forces will carry over into the second half of the year. In large part, it helps that politics are not being incorporated into investment analyses