Fed Chair Powell says the job market is still strong. Here’s what to know
January is typically a big month for job losses, with seasonal workers being let go after the holidays and companies tightening their belts at the outset of a new year. That can make January jobs reporting among the trickiest to forecast. However, last month’s job numbers encouraged many including Fed Chair Jerome Powell who was “encouraged about the healthy economy” and “downward trajectory of inflation.” He went on to add that “we still have a ways to go” before declaring victory on the proverbial soft landing (bringing down inflation without raising unemployment levels).
The S&P 500’s positive start in January 2024 seemed to agree with Powell capturing a 1.6% increase last month, which could be a precursor. Market data going back to 1957, show that if January saw a positive return over 1.5% (which occurred 33 times excluding 2024} there is a probability of positive market returns for the remaining 11 months in the year. Please know this is not a statement of guaranteed return but it could suggest lower volatility.
It should also be noted that this is an election year where many view this as a positive, pointing out that markets tend to rally towards election months. So far, the start to 2024 has been somewhat in-line with the Q1 history. Technology is off to a strong start and once again building on its outperformance while the S&P 500 is making fresh all-time highs for the first time in two years. Aside from the Federal Reserve’s timetable for easing interest rates plus the two ongoing wars (Ukraine and Gaza), 2024 could surprise us.
Summarizing our views, we are more optimistic than last year this time, though there could always be headwinds, we think there are more opportunities that lay ahead. We continue to encourage clients to review their planning needs and related goals. A planning strategy that is often overlooked by many business owners is claiming qualified tax-deductible expenses incurred at home. This is particularly true if you have a store front or you lease office space. Consult your tax professional. In the meantime, have a great week!!
Bryan
From <https://www.cnn.com/2024/02/01/economy/january-jobs-report-preview/index.html>
