Thursday's Scoop: Momentum☀️

Hey friends - almost Friday.

Insiders, look out for the Weekly Scoop tomorrow.

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

1. Finding a job is getting a little harder, but layoffs are low.

2. Americans are earning more for their hard work.

3. It’s getting cheaper to borrow money.

Unemployment Rate: 4.1%
^{Relatively low, but up from record lows.}

Finding a job is getting a little harder, but layoffs are low. The Labor Department reported initial jobless claims slightly last week to 221,000, still in line with pre-crisis levels. The number of people claiming unemployment benefits for consecutive weeks rose last week, indicating that more people were having trouble finding jobs. Hiring slowed in October due to disruptions from Hurricanes Helene and Milton, as well as strikes at the ports and companies like Boeing. However, hurricanes' impact is fading, and striking workers are returning to their jobs.

Americans are earning a lot more for their hard work. The Labor Department reported that US worker productivity climbed last quarter, up 3.4% over the past year from producing 2.8% more while working 0.7% longer hours. Employees are earning much more for their increased output, too. Unit labor costs, which represent how much employers pay workers for each unit of output, grew at a 1.9% annualized rate in the third quarter, up 3.4% over the past year. That’s thanks to 5.5% growth in hourly compensation over the past year. When adjusting for inflation, that’s a 2.8% increase in purchasing power of each paycheck. This kind of growth is key to helping American incomes gain ground on the inflated cost of living.

Inflation Rate: +2.4% (YoY), +0.2% (MoM)
^{Policymakers aim for 2% YoY inflation. (September CPI)}

It’s getting even cheaper to borrow money. The Federal Reserve cut baseline interest rates by a quarter percentage point in November. It was the second rate cut this year after aggressively raising short-term borrowing costs from nearly zero to over 5% within less than eighteen months and holding rates there for the past year in an attempt to slow borrowing and spending and cool the rapid rise in the cost of living. Lower interest rates mean savings accounts will pay less, credit card and auto loan costs will shrink, and mortgage costs should trend lower, potentially reheating the housing market. Policymakers want to avoid restricting borrowing and spending so much that it pushes the economy into a downturn. Still, they don’t want to loosen things up too quickly that it reignites inflation. The Fed expects to keep gradually lowering borrowing costs over the next few years.

The Market:⬆️ +0.7%
S&P 500: 5,973.10
1Mo: +5% | 1Yr: +36% | 5Yr: +93%

The market continued the rally higher on Thursday as investors celebrated the relief from election uncertainty and the potential for lower taxes and deregulation. The Federal Reserve continued lowering borrowing costs, which should boost growth and spending.