by Franklin J. Parker, CFA
The Details
Last week’s data was more of the same: durable goods orders came in well below expectations (orders shrank 6.1% in December), and consumer confidence also posted worse than expected. Personal Consumption Expenditures — which is the Fed’s preferred measure of inflation — posted exactly in-line with expectations, and markets rallied a bit after the news. This week we get data on employment: job openings, the unemployment rate, continuing jobless claims, and total consumer credit, as well as some insight into the health of the service economy. In Europe, we see data on retail sales and producer prices.
All-in-all, the data is still very mixed. Hype around AI has driven the market rally in recent weeks, and the SEC’s approval of several bitcoin ETFs has driven the price of bitcoin (and other crypto) much higher. So, we’ve seen a big rally in risky assets. Yet underlying economic fundamentals are still weak. That said, I have still not gotten the “recession is here” signals, so while I see a storm brewing on the horizon, it is not necessarily time to batten down the hatches and shorten sail. Of course, exactly how this outlook affects you and your investments is completely dependent on your situation — and we’d love to have a conversation with you to discuss it!
Chart of the Week
After trending downward post-Covid, underemployment has spent the last year trending back upward, moving from a low of 6.5% to now 7.2%. Underemployment (U-6) is much broader measure of labor force health as it includes people who have stopped looking for work but would still like to work, and people who work part time but who would like to work full time.
In short, this is a concerning trend — people pushed to the margins of the labor force are (1) not as economically productive and (2) not strong consumers.
More to Explore
Franklin Parker joined host Christopher Hensley on his podcast “Money Matters.” Come join the conversation where we discuss goals-based investing, the future of wealth management, how very wealthy families invest, and many more topics!
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