Economy
Despite the generally gloomy sentiment around the economy right now, there is a bit of encouraging news: continuing claims for unemployment insurance fell to a near two-year low this week. These claims represent the number of people who have already filed an initial claim and are still receiving benefits week after week because they remain unemployed. While higher gas prices have the potential to slow economic activity, we haven’t yet seen that show up in recent layoff data. For now, at least, we remain in a low-hire, low-fire economy. We'll get some more important data on the state of the labor market next Friday with the March jobs report. The last nonfarm payrolls numbers reported the economy lost 92,000 jobs in February. Expectations for the March numbers are for a number somewhere around 50,000.
Markets
Failing to build on early week optimism around a peace plan with Iran, the S&P 500 fell 2.12% this week, the fifth straight week of declines. As bad as the vibes are in the stock market, we aren't seeing analysts slash expectations for earnings growth. Of course, they could be wrong, or late, but expectations remain high for corporate profits, according to FactSet. Perhaps that is why stocks aren't down more than they are. The S&P 500 is down more than 8% from it's all-time high, less than the 10% required to call this a "correction". Also worth noting for followers of politics - we are in a midterm year, and that has historically been a choppy time for the stock market. Ryan Detrick put out some information this week looking at past midterm years and stock performance. The average midterm year sees a decline in stocks by 17%, typically bottoming in the fall. The good news: the following 12 months tended to be pretty profitable.
What We're Reading
- Is That an Accident Up Ahead?- Alina Fisch
- Diesel is a Bigger Problem for Consumers than Gasoline- NY Times
Have a great weekend.
Dogwood Wealth Management