• SPDR S&P 500 ETF Trust (SPY) stock has been a frustrating figure, both enticing and discouraging investors.
• While it’s tempting to be optimistic, multiple challenges exist.
• You want to approach cautiously as circumstances are shaky.

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If you’re like most investors, you’re probably frustrated with the benchmark exchange-traded fund SPDR S&P 500 ETF Trust (NYSEARCA:SPY). With all eyes on SPY stock, it provides real-time guidance on how Wall Street is digesting critical news items on both the domestic and international front. Therefore, the fund talking out of both sides of its mouth is a vexing circumstance.

The bigger picture of course is that on a year-to-date basis, SPY stock is down nearly 5%. Following a meteoric rise from the doldrums of 2020 – when it appeared to many (including yours truly) that we were headed over a cliff – this pedestrian performance is incredibly disappointing.

At the same time, the recent picture has been much more encouraging. Taking away the 1.3% loss on the March 23 session, the bulls have been piling into SPY stock. And even including the midweek blip, the ETF is up nearly 3.4% over the trailing month.

So, which narrative will dominate the trajectory of SPY stock? Both sides have reasons for their arguments, though one angle may be the most reasonable.

SPY Stock May be the Best House in the Worst Block

I hesitate to mention this point because it’s so hackneyed (and so last decade). Still, its relevance has once again reared its ugly head. SPY stock could very well be the best house in the worst block.

Presently, social and economic circumstances seem overwhelming back home. Due to soaring consumer inflation that worsened because of Russia’s decision to invade Ukraine, Americans are getting creamed at the gasoline station. Worse yet, higher fuel charges will lead to downwind pain as anything that needs to be transported will command a premium.

Simultaneously, the expansion of the money supply in response to the unprecedented challenges of the coronavirus pandemic imposes a tax on working people. Unless the Federal Reserve has the political will to address the crisis, turmoil may brew.

With the divisive backdrop of American politics, that’s a combustible mix. Still, where else are you going to put your money but mostly in the US of A?

Whether you look at economic development in terms of innovation or resource production or even population trends, the U.S. ranks relatively favorably across key metrics. That’s not to say we don’t have problems because we do. But we’re arguably better prepared than most countries to handle shocks to the system, which is why SPY stock might make sense.

Current Economic Conditions May be Unsustainable

Although the U.S. has historically been a bastion of stability (at least comparatively), this circumstance doesn’t necessarily mean we’re immune to major destabilizing events. Sure, recent headlines have focused on the immense volatility of the Russian ruble following the nation’s decision to invade its neighbor.

But let’s not forget one thing: our dollar isn’t exactly bulletproof.

No, the greenback isn’t the ruble (thank goodness for that) but at last check, the ruble has gained back some value. On the other hand, the dollar risks losing more purchasing power unless the Fed again does something about the money supply.

According to the Bureau of Labor Statistics, the average hourly earnings of all employees was up 4.2% year-over-year in 2021, whereas this growth rate was 3.3% in 2019. Magnitude wise, we’re talking about a 27% increase in the rate of growth.

Now consider the consumer price index for all urban consumers. Year-over-year growth in the CPI was 4.7% in 2021, whereas it was 1.8% in 2019. Comparing the magnitude difference, we’re talking 160%. To me, this is unsustainable. We’re seeing relatively pitiful growth rates in wages but explosive growth rates in the CPI.

Eventually, these obstacles will impose themselves in every corner of the U.S. economy, which makes SPY stock very questionable.

Be Careful Out There

Since I’m not a money manager, you’re going to have to do your own due diligence regarding your decision on SPY stock. The best that I can do is point you to publicly available information and provide you with insights you might not have considered before.

So, don’t think I’m being negative on SPY stock. If anything, my personal incentive is for SPY stock to rise mercurially higher from here. A robust equities sector – combined with a healthy cryptocurrency market – is good for my brand.

However, I’m concerned about the sustainability of our so-called economic recovery. Therefore, I’m going to point you to the data that I’m seeing in the hope that you can make an informed decision.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.