Zacks Investment Management

This week was packed with newsworthy headlines that we believe are impacting this current market, such as:

• Possibility of bigger rate hikes
• The boom in hospitality and healthcare
• Women in the workforce

Fed Chairman Jerome Powell Signals Possibility of Bigger Rate Hikes – In testimony given before the Senate Banking Committee this week, Chairman Powell surprised markets by indicating the Fed could potentially speed up rate increases if economic data and inflation continue to run too hot. The Fed implemented 75 basis point rate increases last June, July, September, and November, then downshifted to a 50 basis point increase in December and a 25 basis point increase in February. The market had largely expected that 25 basis point increases would come at the next meeting or two, then the Fed would pause rate hikes to allow the impact of higher rates to set in (rate hikes tend to work on a lag). But Chairman Powell’s testimony this week upended these expectations, and he seemed to be relenting to the idea that a recession/hard landing would be necessary to control inflation. In Chairman Powell’s words, “The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” adding that “if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.” The Fed was particularly disheartened by very strong jobs and spending report in January, and inflation data that showed prices decelerating at a much slower pace than previously. The Fed’s preferred inflation gauge, the PCE index, increased by 5.4% year-over-year in January, which marked an uptick from December’s 5.3% year-over-year rate of increase. Market and Fed watchers should pay close attention to Friday’s jobs report, as well as the February release of PCE index figures next week.¹

Time to Focus on YOUR Financial Situation!

Instead of getting caught up in the ever-changing headlines, focus on YOUR financial situation. This can be more beneficial in the long-term in my experience.

This involves understanding your long-term goals, your risk tolerance, your investment time horizon, and other factors that make up your financial situation. To help you do this I recommend reading our guide, “4 Steps to Managing Your Retirement Assets.”

If you have $500,000 or more to invest and want to learn more, click on the link below to get your free guide today!

Download 4 Steps to Managing Your Retirement Assets!³

While the Tech and Housing Sectors Slow, Healthcare and Hospitality are Booming – From a job and hiring perspective, the information technology sector is puttering in 2023, while healthcare and hospitality are booming – essentially the opposite of what we saw in the months and year following the pandemic. This dynamic is meaningful to the overall strength of the labor market, which is one of the factors frustrating the Fed’s efforts to tame inflation. Information technology jobs account for about 1 in 40 jobs in the U.S., while healthcare and hospitality account for 30% of the workforce. Operators of hotels, restaurants, and bars are among the country’s fastest growing employers, and combined with healthcare, created 207,000 new jobs in January – about half of that month’s payroll gains. Other industries are also performing better than information technology. According to the Bureau of Labor Statistics, payrolls in 72% of industries are expanding, which is solidly above the 10-year average of 62%.³

Women Return to the Workforce in Strong Numbers – Despite continued difficulty finding child care particularly following the pandemic, women are returning to the workforce in compelling numbers. For the last four months, women have added more to total payrolls in the U.S. than men, and their return to the workforce has overall been better than men following the pandemic (chart below).⁴

All told, women hold 66% of all jobs in leisure, private education, healthcare, hospitality, and other services jobs. And since those jobs comprise a large percentage of total jobs in the economy, women now hold 49.8% of all nonfarm jobs. Women’s return to the workforce has been a largely unsung pillar propping up the economy over the last few months, and it could serve as a force to soften inflation if the number of available job openings falls as women fill more positions.

How to Navigate Your Retirement? You may be wondering how you can determine your long-term goals, your risk tolerance, your investment time horizon, and other factors that make up your financial situation. This can be a difficult process to navigate on your own. So, to help you get a head start, I would recommend referring to our guide, “4 Steps to Managing Your Retirement Assets.⁶”

This guide offers insight to help you make critical decisions about your retirement and outlines four simple steps that can give you an added advantage when you retire.

If you have $500,000 or more to invest and want to learn more, click on the link below to get your free guide today!

Disclosure