U.S. Economy Added 216,000 Jobs in December, Unemployment Remained at 3.7%… The number of jobs created beat the consensus of 170,000.
What it means— Don’t be distracted by the headline jobs numbers, it’s the earnings that should get your attention. The Establishment Survey, which includes the jobs numbers, has a margin of error of 130,000 and a very suspect history of downward revisions. Missing expectations by 40,000 workers in a workforce of more than 160 million people isn’t cause for concern. Besides, the jobs numbers were revised lower in 11 out of 12 months last year. But rising average earnings, up 0.4% last month and 4.1% last year, could give the Fed more reason to stand pat in March instead of cutting rates by 0.25%. This is what drove the 10-year Treasury yield over 4% and made bond investors nervous.
December Fed Open Market Committee Meeting Minutes Show the Central Bankers Are Wary of Cutting Rates too Soon or Leaving Rates High for too Long… The central bankers discussed a range of issues, leaving investors unsure of what the bankers will do.
What it means— It’s not a dove, but it’s not a hawk. No one’s sure what the central bank has become. The Fed’s forecast suggested three rate cuts this year, but investors had estimated six after Fed Chair Powell’s dovish statements in the press conference following the December meeting. The minutes showed the bankers aren’t sure what comes next or when, which disconcerted investors. Perhaps rates dropped a bit too far and a bit too quickly at the end of the year, particularly on the front end of the curve. As the employment numbers show, each economic report can change investor sentiment.
U.S. Auto Sales Reach 15.5 Million in 2023, Up 12.4%… While it was a double-digit gain from 2022, the number remains well below annual sales before the pandemic of more than 17 million units.
What it means— The money quotes are buried in the reports from the various carmakers. They made more money in 2023 by purposefully constraining supply, and they will try to keep supply tight in the future to minimize price cuts and discounts. Given that the average cost of a new car shot up 30% from 2020 to 2022, that doesn’t sound very consumer friendly. Instead, in a market dominated by just a few manufacturers with deep ties to politics, it looks like a cartel taking advantage of consumers to further political goals. But what do I know? Some foreign manufacturers are winners, with Hyundai-Kia reaching record sales. Profit generating truck sales will have new competitors this year as Tesla and Rivian ramp up production.
Cat Saves Dog from Coyotes… Lane Dyer let his small dog, Oakley, out in the back yard to do its business. Lane’s security video shows a coyote attacking Oakley, and then a second coyote joining in. That’s about the time that Binx, a neighborhood cat, charged the coyotes, giving the injured Oakley a chance to run back inside. The coyotes ran off, Oakley lived to tell the tale (with video evidence), and Binx afﬁrmed his reputation as a tough customer.
Data supplied by HS Dent Research
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