LABOR MARKET REMAINS STRONG:  The U.S. economy added 253,000 net new jobs in April, more than most economists were expecting.  The unemployment rate dropped back to 3.4%.  Job growth was strongest in business and professional services, leisure and hospitality, and health care.  There are some signs of slowing.  There are less job openings in the economy than there have been in two years, although still more than pre-pandemic.  A recent survey of small business owners indicates that only 15% plan on hiring in the next three months  And yet these monthly reports continue to show strong hiring.  We keep hearing from the Fed that this is going to slow down, but the future they were talking about wasn’t April.

FED RAISES KEY RATE ONCE AGAIN:  For the tenth consecutive time, the Fed met, and the Fed decided to raise the Fed Funds rate, this time by 0.25%, now up to a top rate of 5.25%.  “Inflation pressures continue to run high,” Powell said. “The process of getting inflation back down to 2% has a long way to go.”   For the first time since August 2019, the Fed Funds target rate is now higher than headline inflation.

WAGE INCREASES:  At the beginning of the pandemic, there was a huge increase in average hourly earnings because lower paid employees were let go.  The pandemic-related spike reversed a year later.  Year over year wage growth has trended down after peaking at 5.9% in March of 2022.  Year over year wage growth in April came in at 4.4%. 

STOCKS END WEEK ON A HIGH NOTE:  Stocks drifted downward most of the week, but clawed back much of the losses on Friday after the strong jobs report (above), and strong corporate earnings reports by American companies including Apple (caused by a surge in iPhone sales, especially in India), Carvana, Draft Kings and Coinbase.  Earlier in the week, investors seemed a bit rattled by the First Republic Bank seizure by regulators and the Fed’s decision to raise its key rate to the highest level in 16 years, and continued anxiety about a potential recession.

LONGER-TERM PERFORMANCE:  Below are the annualized three-year and five-year numbers for these same indices.  

USED CARS GET A BREAK FROM INFLATION:  Used car vehicles prices decreased by 3.0% in April from the month before.  Year over year, prices are down 4.4%.

GETTING ENCOURAGED IN PANAMA:  My wife and i spent most of last week in Panama.  Some of my travel serves many purposes.  On this trip, I spent time with several clients, enjoyed some pleasure time, and did some volunteer work with a nonprofit with whom I have a strong connection.  I have never been to Panama or any country in Central America.  My first observation:  People smile more here.  I wish we could learn that in the U.S.  Second, there is a lot of need here.  Panama City is a large, modern city, but drive a few minutes out of downtown, and you see scenes like the one below. The nonprofit that I support, Edify, just began work here a little over a year ago helping small, low (very low) cost, private Christian schools learn how to survive, become sustainable, and thrive.  In many places where these school pop up, there are no realistic alternatives.  One school where I spent some time moved into an old bar, and now serves about 80 local students.  Another was in a remote, rural area closer to the Colombian border.  We heard all about the difficulties in getting through COVID which caused schools to close for a full three years here.  Can a family do remote learning when the only technology in the home (with no running water or electricity) is one cell phone that is needed by a parent who is trying to earn enough money to support his/her family?  At best, not well, and at worst, not at all.  The leaders of both of these schools were extraordinary women, inspiring women.  Edify is helping them learn to organize their school (or small business) in a manner that supports obtaining loans (for expansion of space or technology investment), training teachers, building curriculum, marketing, you name it. It is encouraging to see compassionate leaders like these women gain hope that they will be able to not only continue their work, but grow it and help more kids.

It was also cool to see the Panama Canal and the old town of Casco Viejo!

Have a great week!

“I miss everything that makes up Panama. I don’t have a preference. I love my country.”  Mariano Rivera

“He who gathers money little by little makes it grow.”  Proverbs 13:11

SOURCES:
LABOR MARKET REMAINS STRONG:https://www.inc.com/sarah-lynch-/the-labor-market-remains-resilient-with-a-strong-april-report-why-that-may-not-be-good-news.html AND https://www.bls.gov/news.release/empsit.nr0.htm
FED RAISES KEY RATE ONCE AGAIN:  https://www.msn.com/en-us/money/markets/fed-raises-interest-rates-025-escalating-inflation-fight/ar-AA1aH7Qj
USED CARS GET A BREAK FROM INFLATION: https://publish.manheim.com/en/services/consulting/used-vehicle-value-index.html
WAGE INCREASES: https://www.calculatedriskblog.com/2023/05/comments-on-april-employment-report.html

(c) 2023 A.D., Stonecrop Wealth Advisors, LLC, All Rights Reserved

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets. 
*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States. 
*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.