🧭 The Weekly Scoop

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Hey friends, this is our second Weekly Scoop. Let us know what you think of it!

This year is all about uncertainty. We had the pandemic, which inspired a ton of stimulus that kept the economy out of a depression. But, it was a little too much juice, and the economy overheated (spiking inflation). Now we’re coming down from that over-stimulated high, and everyone’s trying to predict whether we’re crashing or just getting back to neutral.

Investors are combing through the economic data each week, bouncing back and forth between:

• “Hard Landing,” aka a recession that could be any variation of economic downturn, with spiking unemployment, lower spending, and more companies going out of business. Few expect that to be comparable to 2008.

• “Soft Landing,” aka just a light economic slowdown overall, but some industries see more trouble and unemployment than others.

• “No Landing,” aka returning to neutral. Inflation, the biggest economic problem, just goes away eventually without a recession, and the economy starts growing again.

You could argue we’re already soft landing or even in a recession. One thing’s for certain: this situation isn’t going to follow the normal playbook. It’s likely to be a bumpy road.

Last month, the banking crisis, higher inflation, and a really strong jobs market had everyone worried about the hard landing. If higher interest rates aren’t able to slow the economy and reduce inflation, policymakers would likely have to push us into recession to control inflation. So a little slower hiring, fewer job openings, and falling inflation are all welcome signs.

Last week, we got some good news on the jobs market. Hiring slowed down, and companies removed some job openings, but layoffs didn’t increase dramatically. That’s the sweet spot.

This week, it was all about inflation. That was good news too. While it’s going away, there’s still a long way to go before it’s not a problem.

Investors are watching to see if the recent banking panic will lead to less lending. Earnings season is starting, too, so we’ll get a peak into the financial health of the country’s biggest companies.

🐻 Reasons to be pessimistic:

• Policymakers are worried about last month's banking crisis creating more economic problems. Minutes released from the previous Federal Reserve meeting revealed concerns that even if there are no more bank runs or failures, banks will be more cautious with their lending, slowing business activity. Lending data from the Federal Reserve and surveys from small business owners have confirmed some of those suspicions.

• Wages aren't keeping up with inflation. Average hourly earnings rose by 0.3% in March, now up 4.2% over the past year. That's the slowest one-year growth since June 2021. Living costs have increased by 5% over the past twelve months.

• Consumers worry about inflation picking up again this year but eventually going away. The New York Federal Reserve's consumer survey highlighted a jump in one-year inflation expectations but a decline in five-year expectations. Inflation expectations are important because they can influence behavior that becomes self-fulfilling.

• Manhattan rents are higher than ever. It's not even peak season yet, and rental costs keep climbing. The median price for a one-bedroom apartment reached a new all-time high of $4,150 per month, according to a report from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

• Recent home buyers face declining values but high mortgages. Data firm Black Knight reported that one in ten people who bought a home last year now owe more than their properties are worth.

• Investors are pretty pessimistic about corporate profits, expecting earnings to be down -7% from last year, according to Factset. That's the most significant decline since the pandemic.

• Small business owners are still struggling with higher costs and staffing issues. The National Federation of Independent Business' Small Business Optimism Index declined last month to the lowest level in years.

🐂 Reasons to be optimistic:

• The March jobs report on Friday showed that hiring is still healthy. Employers added another 236,000 workers last month, pointing to more resilience in the economy. The leisure and hospitality sector hired the most workers, while the retail industry cut staff.

• Layoffs inched up last week. The Labor Department reported initial unemployment claims of 239,000. Layoffs have been creeping up this year, but still have a ways to go before looking like trouble.

• Living costs rose less than expected in March, putting inflation back on its downward course. The Bureau of Labor Statistics reported the Consumer Price Index rose 0.1% in March after jumping 0.4% in February and 0.5% in January. Living costs are 5% higher than a year ago.

• Business supply costs dropped unexpectedly in March. The Labor Department said the Producer Price Index dipped -0.5% in March, the most significant drop since April 2020. A considerable reduction in gas prices takes most of the credit, but costs for services also fell significantly.

🏡 For your home

6.3% = Average 30-year mortgage rate

That’s down from 6.8% a month ago and up from 4.8% a year ago. _{Mortgage Bankers Association, 4/2/23}

$363,000 = Median existing home sales price

It was $361K a month ago and $362K a year ago. _{National Association of Realtors, 1/31/23}

💼 For your work

239,000 = Layoffs Last Week (Initial jobless claims)

That’s up from 228K the week before and a little higher than pre-covid averages. _{Labor Dept., 4/8/23}

236,000 = New jobs added last month

That’s down from 326K the month before and slightly above pre-covid averages. _{Labor Dept., 3/31/23}

3.5% = Unemployment rate

That’s down from 3.6% the month before and near the lowest rate in 50+ years. _{Labor Dept., 3/31/23}

9.9M = Available jobs

That’s down from 10.6M the month before and well above pre-covid averages of ~7M. _{Labor Dept., 2/28/23}

Who’s hiring: Construction, leisure, and hospitality

Who’s firing: Finance, technology, and business services

👜 For your wallet

5.0% = Cost of living increase (1-Year Inflation)

Living costs are 0.1% higher than the month before. Normal inflation sees prices rise by 0% to 0.2% per month, 1-2% per year. _{Bureau of Labor Statistics, 3/31/23}

8.4% = Groceries cost increase (1-Year inflation)

Groceries are -0.3% less expensive than a month ago. _{Bureau of Labor Statistics, 3/31/23}

$3.65 = National Gas Price/Gallon

That’s up from $3.47 the month before and lower than $4.08 a year ago. _{AAA., 4/13/23}

💰For your savings

0.24% = Average interest banks pay on a savings account

5.00% = Interest rate banks earn on their savings accounts

The Federal Reserve has raised baseline interest rates from 0% to 5% in the past year. Make sure your bank is paying you higher interest on your savings. _{Federal Reserve, 3/22/23}

💸For your investments

+1.6% = This past week’s change in the US Stock Market

+7% past month, -6% past year, and +55% over 5 years. _{S&P 500 Index, 4/13/23}

3.5% = The yield on the 10-Year US Treasury Bond

Yields are +4% past week, -7% past month, and +27% over the past year. _{US Government Bonds, 4/13/23}

+8% = This past week’s price change for Bitcoin

+25% in the past month and -26% in the past year. _{Coinbase, 4/13/23}

+8% = This past week’s price change for Ethereum

+20% in the past month and -36% in the past year. _{Coinbase, 4/13/23}