Kevin Kroskey's Market Commentary: 2017

November Market Commentary

After gaining 3.07% for November, the S&P 500 has now posted its eighth consecutive month of positive returns. International markets were up more modestly recently while bond returns were negative at -0.13% in November. For 2017, a 60% global stock and 40% bond portfolio is now up more than 13%; 40% global stock portfolio nearly 10%.

Index	YTD	1 Mo.	3 Mo.	3 Years	5 Years
S&P 500 Index	20.49%	3.07%	7.65%	10.91%	15.74%
MSCI EAFE Index (net div.)	23.06%	1.05%	5.14%	5.97%	8.24%
MSCI Emerging Markets Index (net div.)	32.53%	0.20%	3.30%	6.15%	4.61%
S&P Global REIT Index (net div.)	6.32%	3.01%	1.51%	4.08%	7.32%
Barclays U.S. Aggregate Bond Index	3.07%	-0.13%	-0.55%	2.11%	1.98%
100% MSCI All Country World Index (net div.)	22.01%	1.94%	6.06%	8.01%	10.94%
60% MSCI World & 40% Barclays US Agg Bond	13.39%	1.25%	3.60%	5.87%	7.88%
40% MSCI World & 60% Barclays US Agg Bond	9.86%	0.79%	2.21%	4.66%	5.92%

Key Economic News

Employment: Total employment rose by 261,000 in October following September's job reduction. The unemployment rate edged down to 4.1%. Over the 12 months ended in October, average hourly earnings have risen $0.63, or 2.4%.

Interest rates: The Federal Open Market Committee met at the end of October and left the target federal funds rate range at 1.00%-1.25%. However, some economic indicators are showing mild inflationary pressures, which, when coupled with a labor market that could be nearing full employment, may lead to another interest rate hike when the Committee next meets in mid-December.

GDP: The second estimate of the third-quarter gross domestic product showed expansion at an annual rate of 3.3%, according to the Bureau of Economic Analysis. The second-quarter GDP grew at an annualized rate of 3.1%.

Inflation: For the 12 months ended in October, consumer prices (CPI) are up 2.0%, a mark that approaches the Fed's 2.0% target for inflation. Core prices, which exclude food and energy, increased 0.2% in October, and are up 1.8% over the prior 12 months.

Looking Ahead

All indications are that the Federal Reserve will relax stimulus measures by increasing the federal funds interest rate when the Committee meets this month.

As always: stay disciplined and focus on those things you can control.

To Your Prosperity,

Kevin Kroskey, CFP®, MBA

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

October Market Commentary

Stock growth remained steady for much of October lead again by Foreign Emerging Markets (32% YTD). Favorable corporate earnings reports, a strong jobs sector, and growing consumer income helped to overcome any trepidation's investors may have had. The S&P 500 is now up 17% YTD while a 60% global stock and 40% bond portfolio is up 12%.

Index	YTD	1 Mo.	3 Mo.	3 Years	5 Years
S&P 500 Index	16.91%	2.33%	4.76%	10.77%	15.18%
MSCI EAFE Index (net div.)	21.78%	1.52%	4.01%	6.08%	8.53%
MSCI Emerging Markets Index (net div.)	32.26%	3.51%	5.39%	5.70%	4.83%
S&P Global REIT Index (net div.)	3.22%	-1.05%	-1.70%	3.59%	6.69%
Barclays U.S. Aggregate Bond Index	3.20%	0.06%	0.47%	2.40%	2.04%
100% MSCI All Country World Index (net div.)	19.69%	2.08%	4.45%	7.92%	10.80%
60% MSCI World & 40% Barclays US Agg Bond	12.00%	1.16%	2.78%	5.96%	7.79%
40% MSCI World & 60% Barclays US Agg Bond	9.00%	0.79%	2.01%	4.81%	5.88%

Key Economic News

Employment: September saw a loss of 33,000 jobs after averaging 172,000 new jobs over the prior 12 months. It appears to indicate that the labor market is tightening with fewer jobs available and increasing wages needed to attract workers.

Interest rates: The Federal Open Market Committee met in September and left the target federal funds rate range at 1.00%-1.25%. However, some economic indicators are showing mild inflationary pressures, which, when coupled with a tightening labor market, may lead to another interest rate hike at the next meeting in early November.

GDP: The first estimate of the third-quarter gross domestic product showed expansion at an annual rate of 3.0%, according to the Bureau of Economic Analysis. The second-quarter GDP grew at an annualized rate of 3.1%. Results have been strong.

Inflation: According to the Consumer Price Index, for the 12 months ended in September, consumer prices are up 2.2%, a mark that approaches the Fed's 2.0% target for inflation. Core prices, which exclude food and energy, are up 1.7% since September 2016.

Looking Ahead

The Federal Open Market Committee will likely raise the short-term interest rate following its meeting in the first week of November. Consumer spending should pick up entering the holiday season, which could nudge inflation higher.

As always: stay disciplined and focus on those things you can control.

To Your Prosperity,

Kevin Kroskey, CFP®, MBA

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

September Market Commentary

The summer saw the economy slow a bit, inflation remain stagnant, wages advanced only slightly, tensions between North Korea and the United States escalate, and hurricanes blast the southern states and Puerto Rico. Through it all, the stock market continued to enjoy monthly gains, with several of the benchmark indexes reaching all-time highs.

International markets led the way again in September while a 60% global stock 40% US aggregate bond portfolio is up 8.1% year to date through September.

Key Monthly Economic News

Employment: August saw 156,000 new jobs added -- a little below the monthly average of 176,000 per month for 2017. Over the 12 months ended in August, average hourly earnings have risen 2.5%.

Interest rates: The Federal Open Market Committee met in September and left the target federal funds rate range at 1.00%-1.25%. The Committee again indicated that it will remain on schedule to raise interest rates at least once more this year.

GDP: The gross domestic product expanded over the second quarter at an annual rate of 3.1%. The first-quarter GDP grew at an annualized rate of 1.2%.

Inflation: Inflation continues to be weak. The personal consumption expenditures (PCE) price index (a measure of what consumers pay for goods and services) ticked up only 0.2% in August following a 0.1% bump in July.

Consumer sentiment: The Consumer Confidence Index® for September declined to 119.8 from July's revised 120.4. Not surprisingly, consumer confidence in the economy decreased considerably in Texas and Florida following the devastation caused by hurricanes.

As always: stay disciplined and focus on those things you can control. (Hint: it's not the stock market.)

To Your Prosperity,

Kevin Kroskey, CFP®, MBA

Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.

August Market Commentary

Strong second-quarter gross domestic product (GDP) figures and steady job gains helped to contribute to higher stock prices, despite financial losses caused by Hurricane Harvey. Emerging market stocks continued their positive momentum in August and were up 2.23% (28.29% for 2017). The S&P 500 was slightly positive at 0.31% (11.93% in 2017) while international developed stocks were about flat (17.05% in 2017).

Key Monthly Economic News

Employment: In July, job growth expanded by 209,000 and the unemployment rate slid 0.1 percentage point to 4.3%, representing about 7.0 million unemployed persons. Employment growth has averaged 184,000 per month thus far this year, in line with the average monthly gain of 187,000 in 2016.

Interest rates: The Federal Open Market Committee did not meet in August, so the target federal funds rate range remained at 1.00%-1.25%. Inflation has been stagnant as of late. Thus the September meeting may conclude without a rate increase.

GDP: The gross domestic product expanded over the second quarter at an annual rate of 3.0%, according to the second estimate from the Bureau of Economic Analysis. The first-quarter GDP grew at an annualized rate of 1.2%.

Inflation: Consumer prices rose a scant 0.1% in July, after recording no change in June. For the 12 months ended in July, consumer prices are up 1.7%, a mark that remains below the Fed's 2.0% target for inflation. Core prices, which exclude food and energy, edged up 0.1% in July, the same increase as June, and are up 1.7% year-over-year.

Consumer sentiment: The Conference Board Consumer Confidence Index® for August rose to 122.9, up from July's revised 120.0. Consumers expressed growing confidence in current economic conditions, but were reticent about future economic prospects.

As always: stay disciplined and focus on those things you can control.

To Your Prosperity,

Kevin Kroskey, CFP®, MBA

July Monthly Market Commentary

The month of July was again strongly positive for international markets as stock markets in both international developed (2.88%) and emerging (5.96%) economies, continuing to receive a tailwind in the U.S. dollar’s continued trend downward. The S&P 500 was also positive (2.6%) as were bonds (0.43%) during the month.

Key Monthly Economic News

Employment: In June, job growth expanded while wages showed little upward movement. There were 222,000 new jobs added in June following May's weak 152,000 total. Employment growth has averaged 180,000 per month through June, in line with the average monthly gain of 187,000 in 2016.

Interest rates: Following its meeting in July, the Federal Open Market Committee held the target range for the federal funds rate at 1.00%-1.25%. As it was following the Committee's meeting in June, inflation has failed to progress as anticipated. Otherwise, employment is solid and both household spending and business investment are up. The Committee gave no clear indication as to what it may do when it next meets in September.

GDP: The gross domestic product expanded over the second quarter at an annual rate of 2.6%, according to the advance estimate from the Bureau of Economic Analysis. The first-quarter GDP grew at an annualized rate of 1.2%.

Inflation: For the past few months, the major indicators are showing that inflation data is weak. Consumer spending, as measured by personal consumption expenditures (PCE), expanded at a rate of 0.1% in June.

International markets: Greece is slowly showing signs of economic progress. Demand has been solid for the country's first bond issuance in three years, although not significant enough to preclude the need for more debt relief. The euro continued to climb following the European Central Bank's decision to maintain its current interest rate policy.

Looking Ahead

Interest rates will remain unchanged at least until mid-September, when the Federal Open Market meets again. The next release of the gross domestic product for the second quarter will be based on more current financial and economic information, which could impact the initial 2.6% growth rate that came out in July's report.

As always: stay disciplined and focus on those things you can control.

To Your Prosperity,

Kevin Kroskey, CFP®, MBA

Market indices listed are unmanaged and are not available for direct investment.

2017 Second Quarter Market Commentary

The U.S. stock market has more than tripled in value during the runup that started in March 2009, and the most recent quarter somehow managed to accelerate the upward trend. We have just experienced the third-best first half, in terms of U.S. market returns, of the 2000s. Yet, international markets have been performing even more strongly in 2017 and over the last year.

By any measure, this represents a strong first half of the year, driven by the S&P 500 tech sector, biotech firms and information technology companies generally.

Meanwhile, the energy sector, which was a big winner last year, has dragged down returns in 2017. This proves once again the value of diversification; just when you start to question the value of holding a certain investment, or wonder why the entire portfolio isn’t crowded into one that is outperforming, the tide turns and the rabbit becomes the hare and the hare becomes the rabbit. If only this were predictable.

There are many uncertainties to watch in the days ahead. The U.S. Congress is still debating a health care package, and has promised to revise our corporate and individual tax codes later this year. There’s an infrastructure package somewhere on the horizon, and perhaps a round or two of tariffs on imported goods. Inflation often follows when the Fed raises rates, but we don’t know if or when the Fed will do that, or by how much.

Meanwhile, the current the bull market is aging, and the runup has lasted for longer than just about anybody would have expected when we came out of the gloomy period after the 2008 crisis. Inevitably, we are moving ever closer to a period when stock prices will go down. Yet, that day cannot be predicted in advance and basic principles of diversification and discipline will be required.

To Your Prosperity,

Kevin Kroskey, CFP®, MBA

Sources:
Wilshire index data: http://www.wilshire.com/Indexes/calculator/
Russell index data: http://www.ftse.com/products/indices/russell-us
S&P index data: http://www.standardandpoors.com/indices/sp-500/en/us/?indexId=spusa-500-usduf--p-us-l--
Nasdaq index data:
http://quotes.morningstar.com/indexquote/quote.html?t=COMP
http://www.nasdaq.com/markets/indices/nasdaq-total-returns.aspx
International indices: https://www.msci.com/end-of-day-data-search
Commodities index data: http://us.spindices.com/index-family/commodities/sp-gsci
Treasury market rates: http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/
Bond rates:

http://www.bloomberg.com/markets/rates-bonds/corporate-bonds/
General:

https://www.ft.com/content/cb5b1156-5d9e-11e7-b553-e2df1b0c3220
https://wdef.com/2017/06/29/economy-grew-1-4-in-first-quarter-higher-than-previous-estimates/
http://money.cnn.com/2017/01/06/news/economy/december-jobs-report-2016/index.html?iid=EL

May Monthly Market Commentary

The month of May was strongly positive for international markets as stock markets in both international developed (3.67%) and emerging (2.96%) economies not only provided positive returns but also received a tailwind in the U.S. dollar’s continued trend downward. The S&P 500 was also positive (1.41%) as were bonds (0.77%) during the month.

Key Monthly Economic News

Employment: We saw wage growth continuing with average hourly earnings increasing by $0.07 to $26.19, following a $0.05 increase in March. Over the last 12 months ended in April, average hourly earnings have risen by $0.65, or 2.5%.

Interest rates: The Federal Open Market Committee conceded that consumer spending may have slowed in the first quarter, prompting the Committee to leave interest rates unchanged at 0.75%-1.00%. Continued strength in employment and increases in consumer spending and inflation next month may prompt the FOMC to consider a rate increase when it next meets in June.

GDP: Expansion of the U.S. economy slowed over the first three months of 2017. According to the Bureau of Economic Analysis, the first-quarter 2017 gross domestic product grew at an annualized rate of 1.2%. The fourth-quarter 2016 GDP grew at an annual rate of 2.1%.

Inflation: For the year, consumer prices are up 2.2%. Core prices, which exclude volatile food and energy, increased 0.1% for the month and have climbed 1.9% since April 2016.

International markets: The election of Emmanuel Macron as France's president was greeted favorably by eurozone investors early in May.

Looking Ahead

Economic signs were mixed last month. It is not certain that the FOMC will raise interest rates when it meets in June, yet their stated path is to expect more rate increases in 2017. The final GDP figures for the first quarter are out in June. Consumer spending has been relatively weak through much of the first part of 2017, causing inflation to slow a bit.

As always: stay disciplined, focus on those things you can control, and ignore the rest.

To Your Prosperity,

Kevin Kroskey, CFP®, MBA

Market indices listed are unmanaged and are not available for direct investment.

April Monthly Market Commentary

The month of April yielded positive returns for all major indices with international stock markets leading on the heels of the boost from the French elections. Emerging Markets are the best performing asset class now up 13.88% for 2017. A 60% stock and 40% bond balanced portfolio is up 4.10%.

April’s Economic Highlights

Employment: The employment report for March showed job hirings slowed to 98,000 following gains of 219,000 in February and 216,000 in January, revised. Average hourly earnings increased by $0.05 to $26.14, following a $0.06 increase in February. Over the last 12 months ended in March, average hourly earnings have risen by $0.68, or 2.7%.

Interest rates: The Federal Open Market Committee did not meet in April, but is scheduled to meet during the first week of May. While the FOMC anticipated raising interest rates three times during 2017, some members of the Committee will want to see solid economic growth before voting to increase rates at the next FOMC meeting in May. [Update: on 5/3/2017, After its two-day policy meeting, the Federal Open Market Committee unanimously voted to hold the federal funds rate between 0.75% and 1.00%, citing slowing economic growth.}

GDP: Expansion of the U.S. economy slowed over the first three months of 2017. According to the Bureau of Economic Analysis, the first-quarter 2017 gross domestic product grew at an annualized rate of 0.7% compared to the fourth-quarter 2016 GDP, which grew at an annual rate of 2.1%.

Inflation: Consumer prices also retreated in March, slipping 0.3% from February. For the year, consumer prices are up 2.4%. Core prices, which exclude food and energy, dropped 0.1% for the month and have increased 2.0% since March 2016.

International markets: In France, the rise of Emmanuel Macron, a former investment banker, as the heavy favorite to win the May 7 presidential race sent stocks and the euro higher, as the eurozone continues to gain its economic footing following the financial crisis of 2008. Greece reached a budget surplus that's eight times higher than the 0.5% primary target set by its creditors. This bodes well for continued bailout support for the financially embattled country.

As always: stay disciplined, focus on those things you can control, and ignore the rest.

To Your Prosperity,

Kevin Kroskey, CFP®, MBA

March Monthly Market Commentary

The month of March was about a push for the U.S. Market with the SP 500 up 0.12%. International markets, however, were up more than 2.5%, as the U.S. dollar continued to give back some ground it gained in late 2016. The first quarter was most positive for Emerging Markets up 11.44%.

Key Monthly Economic News

Employment: February's employment report showed continued strengthening in the labor sector with 235,000 new jobs added in the month, on the heels of 238,000 new jobs added in January. Over the last 12 months ended in February, average hourly earnings have risen by $0.71, or 2.8%. This increase is a good sign for the economy but puts pressure on profit margins at companies.
Interest rates: Following its meeting in March, the Federal Open Market Committee raised the target range for the federal funds rate by 25 basis points to 0.75%-1.00%. This is the first interest rate change for 2017, although two more increases are expected this year per the FOMC.
Inflation: Inflation, as measured by personal consumption expenditures, reached the Fed's 2.0% annual target in February. Consumer prices are up 2.7% for the year, a mark that is not only well above the Fed's 2.0% target for inflation, but stands as the highest rate of growth in almost five years. Even the core rate, which excludes energy, is holding steady at 2.2% since February 2016.
International markets: The UK formally began the process of leaving the EU. This action now opens a two-year window for Britain to negotiate the terms of its exit. The bottom line is that nothing dramatic is likely to happen whether economically or in the investment markets as a result of this despite the initial reactions in June 2016.

Looking Ahead

Market pundits have been telling us that the market’s sudden rise that begin after the elections in November is the result of the so-called “Trump Trade.” This is shorthand for an expectation that companies and individuals will soon be paying fewer taxes and be burdened by fewer regulations, leading to higher profits and greater productivity. Add in promised infrastructure spending, and the expectation was an economic boom across virtually all sectors.

There is no sign just yet of that boom. Rather a continuation of the slow and steady recovery that the U.S. has experienced since 2009. The latest reports show that the U.S. gross domestic product grew just 1.6% last year although though the fourth quarter was more positive and recently revised to 2.1%.

The good news is that corporate profits have been increasing over the last quarters. This will likely need to continue to justify U.S. stock prices and plow through the negative news – much of which will likely be resulting from the sausage-making in Washington.

If employment remains strong and consumer prices trend higher, the Fed may raise the target rate another 0.25% in May, tentatively with at least one more rate increase likely before the end of the year.

As always: stay disciplined, focus on those things you can control, and ignore the rest.

To Your Prosperity,

Kevin Kroskey, CFP®, MBA

February Monthly Market Commentary

Markets continued their positive trend in February as each of the benchmark indexes listed in the table below posted monthly gains. Since the presidential election, investors have continued to pour money into stocks, likely in anticipation of tax cuts and policies intended to further boost corporate earnings.

Corporate earnings were key in driving more recent market growth. For Q4 2016, the earnings growth rate for the S&P 500 was 4.9%. The fourth quarter will mark the first time the index has seen year-over-year growth in earnings for two consecutive quarters since Q1 2015. Continued earnings per share growth is needed to help justify the relatively high valuation of the U.S. stock market. (See expected equity return building blocks here.)

The corporate tax holiday proposed by President Trump is likely to help with the valuation problem as well. Under President Bush in 2004 a similar tax holiday was enacted. While the expected benefits were job creation, the real benefits were to shareholders as companies paid out dividends or bought back stock. Fewer shares of stock equates to a higher earnings per share figure.

“A tax holiday would bring substantial amount of cash back to the U.S. and paying that out to shareholders is good for the economy. But if you’re a politician claiming it will create a lot of jobs or new investment, it isn’t supported by the data.” This was said by Kristin Forbes, Economics Professor at MIT”s Sloan School and member of President Bush’s council of economic advisers in 2004.

February’s Economic Highlights

Employment: Growth in the employment sector remained steady in January. According to the Bureau of Labor Statistics, there were 227,000 new jobs added in January, up from a revised December total of 157,000 and well above the 2016 average of 187,000.

Interest Rates: Continued strength in the labor market and consumer spending, which has sent inflation closer to the Fed target rate of 2.0%, will likely substantiate further rate increases in 2017 and 2018.

GDP: According to the "second" estimate of the GDP from the Bureau of Economic Analysis, fourth-quarter 2016 gross domestic product grew at an annualized rate of 1.9% (the same rate as the first estimate). The growth rate for the third-quarter GDP was 3.5%.

Inflation: Consumer spending increased in January as inflation continues to trend upward. The Producer Price Index, which measures the change in the prices companies receive for goods and services, increased 1.6% over the last year. The Consumer Price Index, which measures what consumers pay for both goods and services, increased 2.5% over the last year — the largest 12-month increase in nearly five years.

Housing: The median sales price for existing homes in January was $228,900--7.1% higher than the median sales price for January 2016.

International markets: Earnings reports from European companies have been positive for the most part, adding to the optimistic economic outlook in Europe.

To Your Prosperity,

Kevin Kroskey, CFP®, MBA

True Wealth Design

This article adapted with permission from Broadridge.

January Monthly Market Commentary

Despite political headlines dominating the news, the markets -- most notably international markets -- continued to provide positive returns in January.

The January Jobs Report

Depending on which survey you look at, economic experts predicted the economy would add an average of between 175,000 and 180,000 jobs in January.⁵ Instead, on Friday, the Bureau of Labor Statistics’ report showed the economy added 227,000 jobs last month—far higher than predicted.⁶ This increase means job growth has continued for 76 months in a row.⁷

You gain a much clearer picture, however, when you look beyond the big headlines and see what other data tells us. Here’s a quick rundown of what we found:

Hourly Earnings Increased, but by a Very Small Margin

Average hourly earnings grew by only 3 cents in January—and showed a 2.5% increase over last year.⁸ This monthly growth is less than a third of what we saw in December 2016.⁹ However, one industry in particular may have caused these slower gains, as a 1% decrease in financial industry earnings depressed overall wage growth.¹⁰

Unemployment Increased, but for a Potentially Positive Reason

When you hear that unemployment increased from 4.7% in December to 4.8% in January, this may sound like bad news.¹¹ However, a major reason for this increase is that labor force participation grew by 0.2% in January, the first increase in months.¹² In other words, after sitting on the sidelines, more people are now rejoining the labor force and creating additional opportunities for economic growth.¹³

Jobs Are Available, but Workers May Need Training or Relocation

While labor force participation increased last month, its 62.9% rate is still near the lowest level in decades.¹⁴According to Glassdoor Chief Economist Andrew Chamberlain, approximately 5.5 million jobs remain open in the U.S.—close to a record number.¹⁵ Some of these jobs, such as retail and food service, don’t require much training, but they aren’t always located near where unemployed workers live. Other jobs in the hot fields of healthcare and technology require training and skills that many workers simply do not have right now.¹⁶ As a result, closing the gap between open jobs and willing workers is a complex challenge for employers and job-searchers alike.

The Bottom Line

The labor market is continuing to improve, but the pace remains slower than what most people would prefer. Nonetheless, the Bureau of Labor Statistics’ latest revisions show that private-sector payrolls have increased for 83 straight months, the longest growth streak since the 1920s.¹⁷

To Your Prosperity,

Kevin Kroskey, CFP®, MBA

True Wealth Design

This article adapted with permission from Platinum Strategies.

^{^[1]} http://www.cnbc.com/2017/02/03/us-markets.html

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https://www.msci.com/end-of-day-data-search

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^{^[4]} http://www.cnbc.com/2017/02/03/us-markets.html

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https://www.bloomberg.com/news/articles/2017-02-03/yellen-patience-on-timing-of-next-hike-justified-by-jobs-report