Today's Scoop:

Hey friends - hope you had a nice weekend. Here's what you need to know today...

1. Unemployment is very low.

2. Companies are still hiring a lot.

3. Consumers aren't as worried about inflation.

S&P 500: 3,892.091Mo: -2% | 1Yr: -17% | 5Yr: +40%

The market drifted lower today after jumping on Friday following the release of the December jobs report. Investors were happy to see fewer jobs added and wages growing more slowly, indicating a cooldown from the overheating economy.

Unemployment is still about as low as it can go. On Friday, the Bureau of Labor Statistics reported unemployment at 3.5%, nearly the lowest rate in over fifty years. Employers hired another 223,000 people, the fewest in two years. There's a labor over-demand, so policymakers are trying to slow the economy to bring things back into balance. Fewer hires mean closer to balance.

Consumers aren't as worried about inflation. The New York Fed’s December Survey of Consumer Expectations reported a steep decline in people's expectations for inflation over the next year. Expectations are important because if we expect things to keep costing more, businesses might keep raising prices in anticipation. It's a vicious cycle.

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Bankruptcy

Bankruptcy is a formal legal process that helps identify a path forward for companies and individuals who can't pay their debts. Lawyers come in to analyze the bankruptcy filer's income, available assets, and debt to figure out how to pay back as much debt as possible by selling non-essential valuables and property, then sometimes restructure the terms of the outstanding debt to something more manageable or wipe it away entirely.

There are different types of bankruptcy filings depending on who files and how dire the situation is. The most common for an individual is Chapter 7, in which the person sells non-essential assets to pay off outstanding debt, keeping their home, car, and other things like clothes. The rest of the debt gets wiped clean.

The most common type of bankruptcy for businesses is Chapter 11, in which the company is allowed to stay operating but gets help restructuring its debt to create terms it can afford. Once the company files Chapter 7, it's out of business and plans to liquidate everything to pay off debts. If you own stock in the company, you might see a return if it recovers from Chapter 11, but you'll lose your investment upon Chapter 7.