Monday's Scoop: Bumpy☀️

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Here’s what you need to know today to inform your work, spending, and investments…

1. Unemployment has started to climb from record lows.

2. Wages aren’t growing very quickly anymore.

3. Americans now expect inflation to stick around.

Unemployment Rate: 3.7%
^{Still near the lowest rate in 50+ years}

Unemployment is rising from historic lows. The Labor Department reported employers added 275,000 more jobs last month, far more than expected. However, the data has some caution flags. The December and January numbers were revised down by a total of 167,000 new jobs, shrinking impressive numbers from those months. Also, the Household survey from the Labor Department pointed to a net loss of 184,000 jobs in February. The unemployment rate increased to 3.9% from 3.7%, as 334,000 more people filed for unemployment. That’s still not far from record-low unemployment. Plus, the labor force participation rate stayed steady for the third straight month.

Wages aren't rising very quickly anymore. The February employment report showed average hourly earnings rose only 0.1% in the month, up 4.3% in the past year. The shortage of workers has given labor negotiating power, and wages started to catch up to skyrocketing living costs in 2023 after two years of pain. However, there’s still a lot of ground to make up. Living costs inflated by 0.3% in January, and February inflation is due out on March 12.

Inflation Rate: +3.1% (YoY), +0.3% (MoM)
^{Policymakers aim for 2% YoY inflation.}

Americans are getting a little worried about inflation again. The New York Federal Reserve’s monthly consumer survey revealed growing concerns about the job market and inflation. People expect more layoffs and think finding a job is getting more difficult. Inflation expectations also rose. Consumers still expect living costs to increase by only 3% over the next year, meaning less inflation than the past year. However, they now expect inflation to stick around longer, with three-year inflation expectations rising to 2.7% from 2.4% and five-year expectations rising to 2.9% from 2.5%. While that’s still much closer to the 2% annual inflation policymakers want to see, it raises concerns about an inflation resurgence. Expectations matter because they can be self-fulfilling, as consumers spend more and businesses raise prices in anticipation of higher costs.

The Market: ⬇️ -0.1%
S&P 500: 5,117.94
1Mo: +2% | 1Yr: +33% | 5Yr: +81%

The market drifted lower on Monday as investors digested news about a slowing job market with less hiring, more unemployment, and weak wage growth. Rising inflation expectations raised more alarms about a stalling economy.