At TM3 Wealth, it is important that you are well informed about what is happening in the markets. Here are a few of the key topics of conversation that deserve the most attention this month. If you have any questions or would like to continue the conversation, please reach out.
December now marks three months in a row with improving news on inflation. Monthly prices declined by 0.1% in December and annual prices increase by 6.5%, down from a 7.1% increase in November1. However, core inflation, which excludes volatile energy and food prices, did tick up during the month, rising 0.3% compared to November’s 0.2% rise. Under the hood, the report showed energy prices fell 4.5%, despite a rise in natural gas prices during the cold weather around Christmas along with prices on used and new cars falling, the first time in two years that prices on new cars declined.
While the job market remains fairly tight, the pace of new jobs continues to slowly cool down. In December, 223,000 new jobs were added to the economy, though this was the fifth month in a row of fewer new jobs than the prior month2. Construction, health care, and hospitality were a few stand-out areas of job growth within the report. Despite a lot of headlines about the residential housing market, total construction jobs increased on average by 19,000 per month in 2022. Overall, the unemployment rate declined from 3.7% to 3.5%.
Consumer sentiment has been in focus lately and, while still pessimistic from a historical standpoint, it improved substantially in the preliminary January report, rising to 64.6, from 59.7 in December3. It marks the highest the index has been since April 2022 as respondents have an improved view of the state of their personal finances as well as the long-run economic outlook. The improving inflation picture also appears to be helping with shorter-term inflation expectations also coming down to their lowest levels since April 2021.
The bottom line: With three months of improving inflation reports, the trend is moving in the right direction and has positive momentum. This may give the Fed some breathing room, though the Fed is still likely to tighten a bit further over their next few policy meetings. A cooling jobs market helps, though there still may not be enough slack within the labor market for the Fed to sleep terribly easy. The language coming from the Fed, as well as the overall economic picture, is likely to play a critical role in market sentiment going forward, with any surprises or abrupt changes presenting as a risk to the early strength of the market in 2023.
—
Sources:
1. Bureau of Labor Statistics, https://www.bls.gov/news.release/cpi.nr0.htm
2. Bureau of Labor Statistics, https://www.bls.gov/news.release/empsit.nr0.htm
3. University of Michigan’s Consumer Sentiment Index, preliminary January release, http://www.sca.isr.umich.edu/
Disclosures
The material presented includes information and opinions provided by a party not related to Thrivent Advisor Network. It has been obtained from sources deemed reliable; but no independent verification has been made, nor is its accuracy or completeness guaranteed. The opinions expressed may not necessarily represent those of Thrivent Advisor Network or its affiliates. They are provided solely for information purposes and are not to be construed as solicitations or offers to buy or sell any products, securities, or services. They also do not include all fees or expenses that may be incurred by investing in specific products. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. You cannot invest directly in an index. The opinions expressed are subject to change as subsequent conditions vary. Thrivent Advisor Network and its affiliates accept no liability for loss or damage of any kind arising from the use of this information.
Investment advisory services offered through Thrivent Advisor Network, LLC., a registered investment adviser and a subsidiary of Thrivent. Clients will separately engage a broker-dealer or custodian to safeguard their investment advisory assets. Review the Thrivent Advisor Network ADV Disclosure Brochure and Wrap-Fee Program Brochure for a full description of services, fees, and expenses. Thrivent Advisor Network LLC advisors may also be registered representatives of a broker-dealer to offer securities products.
Advisory Persons of Thrivent provide advisory services under a “doing business as” name or may have their own legal business entities. However, advisory services are engaged exclusively through Thrivent Advisor Network, LLC, a registered investment adviser. TM3 Wealth and Thrivent Advisor Network, LLC are not affiliated companies. Information in this message is for the intended recipient[s] only. Please visit our website www.tm3wealth.com for important disclosures.
This communication may include forward looking statements. Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “seeks,” “could’” or the negative of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially.
Index Benchmarks presented within this report may not reflect factors relevant for your portfolio or your unique risks, goals or investment objectives. Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index.
The Michigan Consumer Sentiment Index (MCSI) is a monthly survey of consumer confidence levels in the United States conducted by the University of Michigan.
