WE HAVE A DYNAMIC LABOR MARKET: Our current unemployment rate is very low, which is a very positive factor in our economy. Another positive factor is the rapid movement going on in the labor market. When employees are leaving their current employer for “greener pastures” it signals a very healthy labor market. According to last week’s Job Openings and Labor Turnover (JOLT) report from the Bureau of Labor Statistics, there were 6.6 million job openings at the end of March. In that month, there were 5.4 million people hired. 5.3 million people left their current employer.
TAME INFLATION: Despite gasoline price rises, inflation reports for April showed moderating inflation numbers. In April, prices for used cars had the biggest monthly drop since 2009. Airfares had its biggest monthly pull back in four years. These two areas helped keep inflation in check as the various measures of inflation data came in. The several ways inflation is measured show a slowing rate and an overall mark of about 2%.
THE FED HAS ACHIEVED (FOR NOW) ITS GOALS: The U.S. Federal Reserve’s long and often-stated goals have been full employment and a 2% inflation level. The week before last, we saw the unemployment rate fall below 4% for the first time in decades. Last week, inflation data showed that the 2% target is about where the economy seems to be settling for now.
STOCKS REBOUND: Stock prices had their best week in a couple of months. The S&P 500 and the Dow Jones Industrial Average were both up over 2% for the week. Investors seemed to react positively to data suggesting that inflation will remain moderate. If that continues, the Fed will not be forced to raise interest rates quickly. The “just right” growth rate for inflation and interest rates seems to be where investors believe we are heading…this week at least. In addition, energy company stocks rallied along with the rising of oil prices. Technology companies are recovering from their price pullbacks from earlier in the year (Google parent Alphabet, Facebook and Paypal were all up more than 4% for the week).
EMERGING MARKET DEBT STRUGGLING: Buying bonds in emerging markets has been popular. These countries have been borrowing heavily on prospects of strong economic growth. Rates have been attractive and money has been pouring in. Emerging markets added $7.7 trillion in new debt last year. Now, with interest rates moving up in the U.S., many cautious investors have begun to pull out of emerging market debt. About $4 billion has been pulled out of emerging markets bond funds in the last few weeks. Argentina is having a horrible time as its currency has dipped by 12% in the past month, and its central bank has responded by increasing its interest rate to 40%. Many other emerging markets countries are now struggling to raise money in the bond markets.
ANOTHER GOOD YEAR FOR HOTELS: Through May 5, this year is slightly ahead of the record year of 2017. The occupancy rate is 68.2% so far, which is 0.5% ahead of 2017 to date. The average daily rate for hotel rooms so far is $130.14.