3<\/sup><\/a><\/u><\/strong><\/p>\n\n\n\nTo be fair, January can be a quirky month for data given seasonal adjustments, weather, and other factors. But absent a major error in reporting, it\u2019s fair to say the labor market remains piping hot \u2013 which continues to be a problem for the Fed. While it\u2019s true that high-profile companies, particularly in the tech sector, have been announcing layoffs over the past few weeks, it is clear that this appears to be more a byproduct of over-hiring during reopening following the pandemic than an indication of broad economic weakness. Following the payroll report, the unemployment rate fell to a new 50-year low of 3.4%. A strong jobs market frustrates the Federal Reserve, since too little slack implies the possibility \u2013 or perhaps likelihood \u2013 of upward pressure on wages. The good news from last week\u2019s report, however, was that wages grew by just 0.3% month-over-month in January, with the 12-month growth rate falling from 4.8% to 4.4%. The Fed remains wary, particularly given Chairman Powell\u2019s allegiance to the Phillips Curve, which states that inflation and unemployment have an inverse relationship. <\/p>\n\n\n\n
States are Reporting Healthy Cash Reserves \u2013 <\/strong>The U.S. economy remains a mixed bag, with weakening activity in spending, manufacturing, and services largely being neutralized by the strong labor market described above. One bright spot that could help the economy weather a downturn: state finances. Unlike the federal government, state and local governments have an obligation to balance their budgets every year, which means they must account for higher spending with higher revenues or adjust spending downward in years when tax revenue is weaker than expected. When tax revenue falls, it often means states need to make spending cuts and\/or lay off workers, which often makes a downturn worse. In 2023, however, with a possible recession looming, most states are heading into the new year with record-high reserves and \u2018rainy day funds.\u2019 According to the National Association of State Budget Officers, states have approximately $136.8 billion stashed in reserves, which is up from 2021\u2019s levels. States benefited from a swift recovery when the economy reopened following the pandemic, and also from an increase in federal government spending which was distributed to the states. This has put states in a strong position to weather a downturn, if one were to occur. According to Moody\u2019s Analytics, 39 states have the reserves they need to offset lost revenue in a mild recession.4<\/sup><\/p>\n\n\n\nHas the U.S. Housing Market Stabilized? <\/strong>2022 was a challenging year for the U.S. housing market, following two historic years of price appreciation and sales activity. With prices pushing some 40+% higher over a two-year period, many homes started to become unaffordable when mortgage rates more than doubled from 3% to over 7%. The market has experienced some respite so far in 2023, however, as mortgage rates have come down by a full percentage point in anticipation that the Federal Reserve will end its monetary tightening campaign in the first half of the year. Mortgage applications have gone up by about 25% since the end of last year, and Redfin reports that more real estate agents are being contacted relative to a lull seen late last year. Another key data point \u2013 pending home sales \u2013 also rose 2.5%, which tends to be a leading indicator for the housing market.5<\/sup><\/p>\n\n\n\nWill Tech Stocks Roar Ahead in the Next Bull Market? <\/strong>\u2013 2022 marked the worst performance for the tech sector since the tech bubble popped in the 2000-2002 period.<\/p>\n\n\n\nWhen will tech stocks recover? In our latest Market Strategy Report, we take a look at that question and fundamental and sentiment drivers that could weigh on the sector in the next bull market. We also take a look at:<\/p>\n\n\n\n
\n- Will Technology Lag in the Next Bull Market?<\/li>\n\n\n\n
- Earnings Estimates Have Fallen \u2013 But Have They Fallen Enough?<\/li>\n\n\n\n
- Bottom Line for Investors<\/li>\n<\/ul>\n\n\n\n
If you have $500,000 or more to invest and want to learn more, click on the link below to get your free report today!<\/p>\n","protected":false},"excerpt":{"rendered":"
The job numbers in January surprised everyone…including the Fed, states have healthy cash reserves, housing market calms down <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-12279","post","type-post","status-publish","format-standard","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12279","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=12279"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12279\/revisions"}],"predecessor-version":[{"id":12282,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/12279\/revisions\/12282"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=12279"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=12279"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=12279"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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