It’s been a long time (since I rocked and rolled?) since I last wrote a Substack post. Okay. That’s not entirely true. But November 29 does seem like aeons ago. (I’ve been busy with some freelance stuff so I’ve ignored this little blog.) Anyway, here a couple of observations about what’s been going on in the financial world lately.
This is the slowest-moving “recession” in history. It may seem ironic that I, currently unemployed, am talking about how great the economy and labor market are. But look at the latest job numbers. 199,000 jobs added. More than expected. The unemployment rate dipped back down to 3.7%. Wage growth came in at a solid 4% year-over-year clip.
Yes, the job market is notoriously a lagging indicator. There is no uncertainty that these numbers will remain this strong throughout 2024. But still, once the US eventually does dip into recession (and the laws of business cycles and gravity will mean that there will inevitably be another downturn at some point) it’s increasingly looking like the recession will be mild. Fears of another 2008-esque disaster are, hopefully, overblown.
The American consumer does not appear to be tapped out just yet. The strong Black Friday and Cyber Monday post-Thanksgiving holiday sales should be a welcome sign for retailers and consumer goods companies during the fourth quarter. It’s also an encouraging development for the economy writ large. In other words, people are spending for more than just Taylor Swift concert tickets.
So with that in mind, it seems like it’s a good bet to think that the current market rally may last at least through the end of this year. One risk? Federal Reserve chair Jerome Powell could be the proverbial Grinch stealing the Christmas/Santa Claus rally. The Fed is unlikely to actually do anything when it meets next week. Another pause is locked in. But will Powell pull a Scrooge and continue to sound like an inflation hawk during the press conference? Time will tell. We’ll also be getting fresh inflation data for November next week with the latest CPI and PPI numbers. Until then, enjoy the weekend!