Weekly Review week ending 6-7-24
U.S. stock indexes bounced back from a slight dip the previous week, with the NASDAQ and S&P 500 reaching new record highs, surpassing last month's peaks. Technology stocks got a boost from renewed excitement about artificial intelligence, pushing the NASDAQ up by 2.4% for the week (FactSet). Meanwhile, the S&P 500 and Dow saw more modest gains.
The discrepancy between the non-farm payroll survey and the household survey highlights different aspects of the labor market. In May, while the payroll survey reported an addition of 272,000 jobs, exceeding expectations of 180,000, the household survey showed a loss of 408,000 employed individuals. This difference arises because the payroll survey counts every job position, including multiple jobs held by a single person, whereas the household survey counts each person only once, regardless of how many jobs they hold.
This could suggest that more people might be taking on second jobs, increasing the total number of jobs without a corresponding rise in the number of employed individuals. Additionally, the decrease in employment reported by the household survey could indicate that more people are losing their jobs. Consequently, this increased the unemployment rate from 3.9% in April to 4% in May. Thus, the labor market might be experiencing both an increase in the number of multiple job holders and a rise in unemployment.
The increase in people taking on second jobs could be a response to the prolonged cost increases from high inflation, which has made it harder for many to cover basic living expenses. As prices for essentials like housing, food, and healthcare continue to rise and remain elevated, individuals might find that their primary income is no longer sufficient. Surprisingly, wage growth increased to 4% in May from 3.9% in April.
The ambiguity between these indicators, might lead the Fed to wait for more consistent trends before making any decisions on interest rate reductions. The Feds next meeting is scheduled for this Tuesday-Wednesday the 11-12th. They are not expected to lower rates at this point, but it will be interesting to see if they offer any insight into how they’ve been interpreting these data points as well as others that have been reported since their last meeting. Also, we’ll get the Consumer Price Index (CPI) report on Wednesday which hopefully will clarify the inflation story.
As always, if you have any questions or concerns about how these developments might impact your financial planning, feel free to reach out.
Jeremy Raffer, MBA
Director & Wealth Manager
Author “Financial Planning for Widows”
m. 201-747-2705
e. jeremy.raffer@stewardpartners.com
Steward Partners
115 W. Century Rd, Suite 145
Paramus, NJ 07652
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