November 2022 Economic Update

The stock markets did well last month but still have a long way to go to break even.  We have made little moves to most portfolios, especially ones with a long (10+ years) time horizon.  Having a decent amount of cash in any account (investment, savings, etc.) is fine even with a higher inflation rate.

With 2022 wrapping up, it’s time to start thinking about next year’s personal and financial goals.  Do you set goals?  Financially, would you like to save more, pay down the debt, or possibly increase your earnings?  Do not forget your personal goals. These could include more adventures, time off work, being better at _________, or getting in shape, etc.  When you decide on your goals, we can incorporate these into your financial plan and work with you to keep you on track.

November Stock Market Summary

Dow                   5.7%              S&P 400 (Mid Cap)                        5.9%
NASDAQ      4.4%              Russell 2000 (Small Cap)           2.2%
S&P 500           5.4%  

The Dow rose 5.7% in November, while the NASDAQ added 4.4%.  Large caps and mid-caps finished the month up 5.4% and 5.9%, respectively while small caps trailed, ending the month up 2.2%. 

November was also a positive month for the major international indexes.  Canada and the UK rose 5.3% and 6.7%, while France and Germany rallied 7.5% and 8.6%, respectively.  China finished the month up 8.9%, while Japan managed a meager 1.4% gain.  Taken as groups, developed markets jumped a big 13.2%, while emerging markets surged an even bigger 15.6%. 

Gold and silver rose 7.2% and 13.9%, respectively, but oil finished the month down -6.9%; copper ended the month of November up 10.8%.

All data from Yahoo Finance, 12/1/2022

DOMESTIC ECONOMIC HEALTH

The number of Americans filing first-time unemployment benefits fell in the last week of November.

The Labor Department reported initial jobless claims fell by 16,000 to 225,000 in the week ended November 26.  Economists had expected claims to fall by just 5,000.

The number of people already collecting benefits, known as ‘continuing claims’, rose by 57,000 to 1.61 million—its highest level since February.

The Labor Department reported the U.S. added 263,000 new jobs in November, a historically strong pace of hiring that’s good for workers but also threatens to prolong high inflation. 

The unemployment rate remained at 3.7%--close to a 50-year low.  The increase in employment last month was concentrated in hotels, restaurants, and healthcare businesses.  Hiring also rose in construction and manufacturing, two areas of the economy that have been under more duress.  Government employment increased by 42,000. 

On a negative note, retail employment shrank for the third month in a row, and warehouse and transportation jobs also declined.  If the economy is slowing, it is not yet evident in the labor market. 

Home prices continued to fall for a third consecutive month, according to S&P CoreLogic. From the same time last year, pending home sales were down a sharp 37%.

A key measure of inflation rose modestly in October, suggesting that recent red-hot price pressures may be cooling.  The Personal Consumption Expenditures (PCE) index, rumored to be the Federal Reserve’s preferred measure of inflation, slowed to an annualized rate of 6% in October from 6.2% in the prior month.

The rate of inflation appears to be receding, but only very slowly.  Chief North American economist Paul Ashworth of Capital Economics stated, “We expect to see a lot more good news on inflation over the coming months.”

The U.S. economy grew in the third quarter and is showing little sign of recession—at least yet.  The GDP grew at an annualized 2.9% pace in its final third-quarter reading.

The main engine of the economy, consumer spending, increased at a solid 1.7% annual clip in the third quarter, the government said.  Previously the increase was put at a softer 1.4%. 

However, the largest contribution to growth in the third quarter came from a huge drop in the trade deficit—which accounted for practically all the 2.9% rise in GDP. 

ISM reported its Manufacturing index fell to a 30-month low of 49% in November—contracting for the first time since the pandemic.

Continued Claims

Chart from the St. Louis Federal Reserve Website

Phone Call:

One of the hallmarks of a recession is a rise in consumer credit defaults, inevitably resulting in a rise in 3rd-party collection activity. That has not happened yet – in fact, quite the opposite. 3rd-party collection activity is at a record low of 5.7% of consumers – well less than half the 14.6% level seen in 2008’s recession. Despite record high credit card balances being carried by consumers, the rate of default is surprisingly low. (Chart from Wolfstreet.com)

Summary

Our investment and financial planning advice is based on a repeatable process. We attempt to take out the emotional element in the decision-making process. The results will not be perfect 100% of the time but we believe it gives us and you the best chance for success to meet your goals.

It goes without saying that things can change quickly, and we will be ready to make the changes as necessary.  This is also why having a great foundation is important as ever and why I believe so much in this idea.  Good spending habits, emergency funds, healthy lifestyle are a few

Please reach out with any questions, introductions, or set up a time to do something fun.

Shane Callahan may be reached at 720-696-0265 or Shane@EnduranceWealthPlanning.com
EnduranceWealthPlanning.com

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The short and long-term health of our economy is positive.  Value has increased from 1 to 2

History of the “Market” and where we are today

Past Market Performance is no guarantee of future investment performance or success