The Week in Review: January 8, 2024
Steady Freddie Job Growth
The U.S. Bureau of Labor Statistics (BLS) reported that nonfarm payrolls rose by 216,000 in December, while October and November were revised down by a total of 71,000. The unemployment rate held steady at 3.7% in December.
The economy is generating new jobs, but the number of new jobs being created isn’t overwhelming but is solid and respectable.
Figure 1 highlights that the unemployment rate has been holding in a low and steady range. The number of jobs has surpassed the pre-pandemic number, but growth has moderated. This is not surprising, given that the first surge was driven by the reopening of the economy.
On average, the economy generated 225,000 net new jobs per month in 2023—Figure 2.
Figure 3 breaks down total nonfarm payrolls and private-sector jobs, providing a more granular view. Job growth is gradually slowing from 2022 and early 2023. A 3-month average is used to smooth away monthly fluctuations.
Jobs in education are responsible for roughly half the differential between total nonfarm payrolls and the private sector. Education is still just below its pre-pandemic peak.
There was little in the report that might encourage the Federal Reserve to start cutting interest rates in March, as some investors believe may happen. But there are two more employment reports and three readings on inflation before the March meeting.
The Fed's tone has been the biggest shift over the last two years. No longer are we hearing how high the Fed may have to raise interest rates.
Though Fed officials haven’t ruled out the possibility of a rate hike this year, the new stance from the Fed and investors is centered around when and how much the Fed may reduce interest rates in 2024.
Market Summary
Two For the road
The Magnificent Seven (Apple, Microsoft, Google, Amazon, Nvidia, Tesla, and Meta) now have a higher weighting in the MSCI World Index than all of the stocks in the UK, China, France, and Japan combined. - The Wall Street Journal, December 17, 2023
Humanity will install an astonishing 413 GW of solar this year, 58% more than in 2022, which itself marked an almost 42% increase from 2021. That means the world's solar capacity has doubled in the last 18 months and that solar is now the fastest-growing energy technology in history.- FutureCrunch, December 20, 2023
Please do not hesitate to contact me with any questions or concerns. I hope you have a wonderful week!
Bill Stordahl, CFP®
Managing Director
Stordahl Capital Management
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