Navigating Financial Uncertainty Amid Federal Layoffs

 

We know the news surrounding federal layoffs is unsettling, and if you’re feeling uncertain about what comes next, you’re not alone. Change like this can be overwhelming, but please know that you have options and support. Our goal is to help you navigate this transition with clarity and confidence so you can make informed decisions for yourself and your family.

Why Is This Happening?

The federal workforce is experiencing significant changes due to budget reductions, workforce restructuring, and a shift toward modernization. Recent reports indicate that the Trump administration may require agencies to submit layoff plans by March 13, 2025, as part of an effort to cut costs and streamline operations.1

While these changes may feel sudden, they are part of a broader restructuring of government agencies.

What You Can Do Now

While you may not be able to control these changes, you can take steps to protect your financial future:

  • Stay Informed: Keep up with official communications from your agency regarding layoff plans.
  • Know Your Rights: Review federal RIF procedures and understand what benefits and options are available to you.
  • Update Your Resume and Skills: Consider refreshing your resume and exploring new skills that could open up additional career paths.
  • Plan Financially: Now is a good time to review your finances, build an emergency fund, and look for ways to reduce expenses in case of job loss.

Managing Your Thrift Savings Plan (TSP)

If you separate from federal service, you may still have options regarding your TSP, such as adjusting allocations, rolling funds into another qualified plan, or keeping your account active.2 If you have an outstanding TSP loan, you may need to explore repayment options. In some cases, unpaid loans could be treated as taxable distributions.3

We know this is a lot to process, but you don’t have to navigate it alone. If you have any questions or would like to talk through your financial options, we’re here to help.

 

AI bubble burst? What’s next

After reaching new record highs in recent weeks, markets plunged on worries that cheaper AI competition from China could pose risks to U.S. tech companies.1

What caused the market reaction?

Let’s dive in.

What caused the tech market crash?

Much of the market run-up over the last two years has been driven by AI mania, with U.S. companies leading the charge.

However, this narrative faced a test when DeepSeek, a Chinese tech startup, released an advanced (much cheaper) AI model.

DeepSeek claims it was able to develop its advanced model for just $6 million using fewer hard-to-find computer chips, compared to the hundreds of billions collectively invested by U.S. rivals to develop their own AI models.1

If the buzz around DeepSeek R&D numbers turns out to be more than just hype, it raises questions about the efficiency and competitiveness of U.S.-based AI firms.

Why are AI models so expensive to train?

That is the trillion-dollar question.

The rising costs of AI development have been a key focus for investors.

Capital spending on AI model development is soaring, driven by the cost of the massive computing power needed to analyze data.2

The chart below shows the estimated costs to train some of the major models released over the last few years.

One major tech CEO estimated that training advanced AI models could cost anywhere from $10 billion to $100 billion.3

In contrast, DeepSeek claims to have developed its model for a fraction of the cost by using innovative ways to process data using fewer resources.

If their approach is validated, it shows that there may be alternative paths to AI innovation that require less upfront investment.

What will this AI “space race” mean for U.S. AI companies?

While the long-term potential for AI could be massive, it’s still a very new technology with a rapidly evolving landscape and not a lot of return to show for substantial investments.4

If DeepSeek’s approach can be replicated, the disruption could benefit the sector by making it faster and cheaper to release new models.

The new pressure would also force competitors to become more efficient in their operations.

Will the tech selloff trigger a bear market?

Market adjustments like this are not unusual, particularly after periods of strong performance.

Stocks have been riding high on soaring tech firm valuations, and the pullback could be the reset the sector needs to return to Earth.

Looking ahead, we can expect more volatility as investors adjust expectations and digest new data.

Bear markets are always a risk, and it’s wise to stay flexible and be prepared for one to strike.

That said, we see plenty of growth opportunities ahead despite the short-term uncertainty.

As always, we’re watching closely and monitoring trends.

 

Sources

1. CNBC, 2025 [URL: https://www.cnbc.com/2025/01/27/how-the-buzz-around-chinese-ai-model-deepseek-sparked-a-massive-nasdaq-sell-off.html]

2. Stanford, 2024 [URL: https://aiindex.stanford.edu/wp-content/uploads/2024/05/HAI_AI-Index-Report-2024.pdf]

3. IBD, 2024 [URL: https://www.investors.com/news/technology/ai-stocks-openai-artificial-intelligence-models-big-tech-google-meta/]

4. Goldman Sachs, 2024 [URL: https://www.goldmansachs.com/images/migrated/insights/pages/gs-research/gen-ai–too-much-spend,-too-little-benefit-/TOM_AI 2.0_ForRedaction.pdf]

Chart sources:

Stanford, 2024 [URL: https://aiindex.stanford.edu/wp-content/uploads/2024/05/HAI_AI-Index-Report-2024.pdf]

CNN, 2025 [URL: https://www.cnn.com/2025/01/27/tech/deepseek-stocks-ai-china/index.html]

Supporting You Through the LA Wildfires

Like us, I’m sure your heart goes out to all those affected by the wildfires in Los Angeles. Perhaps you or someone you know has been directly affected. If that is the case, please reply to let me know how you’re doing.

Wildfires can be so devastating — taking an immense toll on families, communities, and the broader economy. While natural disasters like these can challenge us in many ways, they also remind us of the incredible resilience of communities and the strength we find in coming together.

While recovery takes time, we have witnessed how both people and economies can rebuild and emerge stronger. We certainly hope for this on behalf of all our friends in the L.A. area!

The economic impacts of the fires are also significant, and understanding them can help us prepare for what’s ahead:

  • Economic losses: Estimated to be between $52 billion and $57 billion, these wildfires represent a massive financial impact that may ripple through the broader U.S. economy.1
  • Insurance industry: Insured losses are projected to approach $10 billion, placing pressure on insurance providers like AIG and Chubb, particularly those serving high-net-worth clients.1
  • Stock market: Utility and insurance stocks have already reacted to the fires, leading to potential volatility in these sectors.2

While these numbers reflect the financial toll, they don’t tell the full story of the lives and communities impacted. For those affected, there are resources and strategies to help ease the burden. We are encouraging everyone we know in the area to:

  • Prioritize safety: Follow evacuation orders immediately if issued for your area.
  • Reach out for immediate assistance: Connect with services like the Red Cross or local disaster relief organizations.3
  • Apply for federal aid: Apply for recovery assistance through the Federal Emergency Management Agency (FEMA) at DisasterAssistance.gov.
  • Explore tax relief options: Such as property tax relief and other benefits available to California residents.4
  • Document damages for insurance claims to ensure you’re receiving the support you’re entitled to.

If you have any questions about how these events might affect you, your loved ones, your financial plan or even your future, we’re here to help. Feel free to reach out anytime.

In times like these, it’s clear how important it is to focus on what matters most: our health, our loved ones, and the communities that keep us strong.

Wishing you safety and peace,
The NorthStar Team

 

Sources:

1. Investor’s Business Daily, 2025 [URL: https://www.investors.com/news/top-california-property-insurer-earns-double-upgrade-from-goldman/]

2. Investor’s Business Daily, 2025 [URL: https://www.investors.com/news/california-palisades-fire-update-stock-market-impact/]

3. Red Cross, 2025 [URL: https://www.redcross.org/about-us/news-and-events/press-release/2025/red-cross-helping-in-southern-california-as-wildfires-force-thousands-from-their-homes.html]

4. California BOE, 2025 [URL: https://www.boe.ca.gov/proptaxes/disaster-relief.htm]

 

What will the new administration do first?

Now that the election is over, what will the new administration prioritize in the new year?

Here are a few things we’re watching in the months ahead:

The debt ceiling debate may reignite in early 2025.

The debt ceiling, the cap on the total amount of debt the U.S. can hold, has been suspended as part of a deal made in the last Congressional fight.1

When the cap returns in January, it may kick off a fresh round of debates and draw attention to the more than $35 trillion the U.S. holds in debt.2

Will lawmakers take action to stem deficit spending? Or will they continue to kick the can down the road?

We’ll have to wait and see.

Tax cuts may be extended past 2025.

A number of popular individual and small business tax breaks are scheduled to expire at the end of 2025, which would trigger higher individual income tax rates and increase estate taxes.3

President-elect Trump may extend or make some or all of these provisions permanent as part of his 2025 priorities.

However, tax cuts lead to lost revenue for the federal government, which would end up adding to the national debt.

It’s hard to know how lawmakers will square these competing priorities, but we’re keeping a close eye on it and will keep you informed.

Tariffs could become a key issue for businesses.

The new administration has announced plans for broad tariffs on imports, especially on goods from China.4

Tariffs can impact inflation and business earnings by increasing the cost of goods and supplies from overseas.

If trading partners respond by adding their own tariffs on U.S. goods, it could hurt overseas demand by making our products more expensive.

How deep or broad those tariffs could be is a big source of uncertainty going into the new year.

However, it’s likely that any new policies would come with many rounds of debate, so the actual impact of tariffs may be much less than the worst-case scenarios.

We’ll keep you updated.

Markets may become volatile with uncertainty.

While the uncertainty of the election has faded, new uncertainty around policy priorities has replaced it.

We’re expecting volatility ahead as analysts digest reports and adjust their positions ahead of the new year.

Investors are also watching data for hints about where the economy is headed next.

The bull market is now over two years old. Should we be worried that a bear market is around the corner?

Probably not.

The chart below shows you the average age of recent bull markets.

While the past doesn’t predict the future, we can see that two years isn’t historically long for a bull market. In fact, the longest bull market on record lasted more than 12 years.5

A sudden turn to a bear market is not likely at this point.

On the other hand, there are a lot of risks in this environment that could shake things up.

If geopolitical issues flare, inflation rebounds, or the business environment starts to look dicey, we can expect markets to correct.

 

Sources:

1. https://bipartisanpolicy.org/blog/debt-limit-2025-treasury-cash-on-hand/

2. https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/

3. https://tax.thomsonreuters.com/blog/what-to-know-about-tcja-expiration/

4. https://www.yahoo.com/news/trumps-proposed-tariffs-raise-prices-205300785.html

5. https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/10-things-you-should-know-about-bull-markets.html

Chart sources: https://finance.yahoo.com/news/the-bull-market-is-2-years-old-heres-where-wall-street-thinks-stocks-go-next-100050648.html?guccounter=1

*Current bull market as of 11/20/24

Can the bulls keep running?

The bull market has officially turned two.

Markets have also had an impressive run since the bottom of the bear market.

Since October 12, 2022, the S&P 500 has gained over 60%.1

Can the bulls keep running?

Given the strong performance in 2023 and the strong 2024 we’re having, it’s reasonable to worry that markets might retreat.

You can see in the chart below that consecutive strong years have happened before.2

That said, past performance doesn’t guarantee that optimists will continue to drive markets.

In fact, it wouldn’t be a surprise to see a pullback ahead.

However, there’s reason to hope for continued optimism.

The bull run we’ve experienced this year has a strong grounding in economic factors.

Factor #1: A growing economy generally boosts markets.

While markets are often impacted by short-term trends and investor psychology, stocks generally follow the economy.

The latest data shows that economists are upbeat about where economic growth is headed.3

Since the stock market is forward-looking, that’s a positive for the bulls.

Factor #2: The Federal Reserve’s interest rate policy is loosening.

A big part of the market story this year is the hope that the Fed will be able to lower interest rates without causing inflation to spike or tipping the economy into recession.

Lower interest rates are generally positive for markets because they make it cheaper for firms and consumers to borrow money.

Lower corporate borrowing costs can fuel growth, R&D, acquisitions, and other capital-intensive projects that boost stock prices.

Factor #3: Optimism about corporate earnings.

While earnings season is still underway, the general consensus is that corporate earnings are looking solid so far.4

That’s great news for markets.

A recent survey of corporate leaders also found that the majority expect company profits to increase.5

Taken together, that’s a positive for the bulls.

However, there are a number of risks we’re watching.

With markets regularly testing new highs, stock valuations are also high.

That means some stocks may be overvalued.

If investors lose optimism about growth, markets will likely retreat.

Uncertainty surrounding American politics and global geopolitics is also high.

While elections and conflicts generally don’t have long-term effects on markets, they can certainly trigger selloffs.6

Overall, we’re still cautiously optimistic about where markets are going in the final months of the year.

It can be tempting to look at market highs and decide to sell and stand on the sidelines.

However, timing markets perfectly is impossible and you risk missing out on future growth.

 

Sources

1. https://finance.yahoo.com/news/the-bull-market-is-2-years-old-heres-where-wall-street-thinks-stocks-go-next-100050648.html

2. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/

3. https://www.wsj.com/economy/economists-predictions-survey-charts-68ba82d6?mod=article_inline

4. https://www.nasdaq.com/articles/stocks-edge-higher-solid-corporate-earnings-boost-market-optimism

5. https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/survey-results-expectations-for-company-performance-by-industry

6. https://www.nytimes.com/2024/10/15/business/stock-market-valuation-outlook.html

Chart sources: https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/

Impact of hurricanes

Are you well and safe?

Have any of your loved ones been impacted by Helene or Milton?

It’s been a rough couple of weeks for the Southeast.

Storms can take a massive toll on families and communities, with challenges that take months and years to resolve.

With an active hurricane season upon us, we’d like to take a moment to talk about how natural disasters can affect markets and the economy.

Natural disasters typically impact the economy in a few ways:

  • Regional, national, and even international supply chains can be disrupted as roads and ports close and goods struggle to move from place to place
  • Economic growth can slow down as businesses shut down, jobs are lost, and consumer demand slows down
  • Markets often experience short-term volatility as investors react to the news and rush to buy and sell
  • Energy prices may spike due to scarcity and supply disruptions

While some companies (such as insurers) typically take a hit from anticipated disaster losses, other businesses (like generator manufacturers) may see a spike due to expected demand.1

This chart shows the financial cost of some hurricanes in the last two decades.

While natural disasters may have a severe short-term impact on local and regional economies, research suggests the long-term negative effects are limited.2

One note to consider: estimates of Helene and Milton damage may be low as it may take years to account for the full cost of property damage, business closures, and economic disruption.

Let’s also keep in mind that billions of dollars in financial losses are massive, but they’re still a drop in the bucket of the overall economy, which is over $27 trillion in size.3

Of course, the plain numbers don’t tell the full story of lives lost and lives disrupted.

Hard-hit areas may take a long time to recover, and some places may never fully return to normal.

In the weeks and months to come, we may see an impact from the hurricanes on inflation, unemployment, and growth data.

 

Sources:

1. https://www.cnbc.com/2024/10/07/generator-maker-generac-soars-insurance-stocks-fall-on-hurricane-milton.html

2. https://www.frbsf.org/wp-content/uploads/wp2020-34.pdf

3. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2023&locations=US&start=1960&view=chart

Chart sources: https://www.investors.com/news/hurricane-helene-34-billion-price-tag-stock-market-impact/

https://www.cnbc.com/2024/10/08/hurricane-milton-could-cause-as-much-as-175-billion-in-damages-according-to-early-estimates.html

https://www.kiplinger.com/slideshow/business/t019-s001-most-expensive-natural-disasters-in-u-s-history/index.html

What do you know about interest rates?

Whenever you listen to financial experts, there’s one topic that will almost always come up: interest rates. But what do interest rates have to do with your portfolio and wealth?

It turns out, a whole lot.

When you hear the term “interest rates” on the news, it’s usually referring to the Federal Funds Rate, which is the rate that banks use when borrowing from one another. This interest rate is the benchmark set by the Federal Open Market Committee (FOMC), and factors in current economic conditions like inflation, employment, and GDP growth.

But why should you care about the Federal Funds Rate?

Because when the country’s benchmark interest rate changes, it has a downstream effect on everything from your mortgage to your investment portfolio. In fact, just a one percentage point decline in interest rates can increase disposable income for individuals across the earning spectrum.1

Take, for instance, a home mortgage. Say you’re looking to purchase a $346,900 home. With a 7% mortgage rate and a 20% downpayment, your monthly payment would be $1,846. But if your rate decreases by just 1%, you would pay $1,664, a savings of $182 per month. If you factor this change over a 30-year mortgage, you’d save a total of $65,691* in interest.2

Your mortgage is just one example of how an interest rate change can directly affect your wealth. Let’s zoom out to see what happens to the economy, and the downstream effects of interest rate changes.

When interest rates rise

While economic growth is good, too much of it can lead to an overheated economy where prices are rising and inflation is a concern. In these scenarios, the FOMC is likely to increase interest rates to help maintain economic stability.

However, an increase in the Fed Funds Rate is usually not good for stock prices since corporations have a harder time borrowing money and expanding during high interest rate periods.

Here’s how you can look at the differences between rising and falling interest rates:

One last thing: Don’t forget about lag time!

Hopefully, the correlation between interest rates, stocks, debt, and the economy is starting to click. But, you should keep in mind that when interest rates change there is usually a lag time between the policy change and its effect on the economy. According to research from the Federal Reserve Bank of St. Louis, it can take anywhere between 18 months to 2 years for interest rate changes to have an impact on the economy.3 

So, the next time you hear about a potential interest rate change, remember that it will take some time before its effects are felt in the economy, and your portfolio.

New presidential candidate? (What it could mean)

A lot has happened recently.

After weeks of gains, markets slid as investors took a step back from big technology stocks.1

At the same time, a global IT outage took major corporations offline across the world.

President Joe Biden withdrew from the election, injecting more uncertainty into the tight race.2

A shooter came close to assassinating Donald Trump at a campaign rally.3

What could all this mean for investors? Let’s discuss.

Crowdstrike, a global IT outsourcing company, took millions of Windows devices offline with a bad update.

Despite causing hours and days of chaos for airlines, banks, hospitals, and other companies, the economic impact of the outage is likely to be muted.4

However, it shows just how interconnected and fragile our technology infrastructure can be.

Markets bounced back quickly from the tech-triggered slide.2

It’s pretty common for markets to recover from a slide when overall sentiment or fundamentals haven’t shifted

In this case, the quick correction was mostly concentrated in the tech sector and was related to investors shifting their positions away from some of the sector’s biggest winners.

Let’s use this as a teachable moment:

One of the challenges of being a long-term investor is accepting down days and weeks. 

Investors who panic and sell miss out on the strong market days that often follow.

While markets rebounded back quickly this time, that’s not guaranteed.

We’re expecting markets to remain volatile as investors position themselves ahead of major earnings reports and economic data.

What could a new Democratic presidential candidate mean for investors?

In the short term, extra uncertainty around the election could stoke volatility as traders revisit their bets.

However, in the medium to long term, the election isn’t likely to have much impact on markets at all – despite what the headlines might tell you.

Here’s a quick look at how the S&P 500 performed when each party held the White House.

As you can see, markets grew regardless of which party held the presidency.5

And – markets did better with a divided Congress.

That’s likely because a legislative branch split between parties makes it harder to pass new tax laws or other legislation that could affect business performance.

Bottom line: market fundamentals haven’t significantly changed but we expect more volatility ahead.

We’re watching the market and economic data closely and we’ll keep you informed along the way.

 

Sources:

1. https://finance.yahoo.com/news/asian-stocks-track-us-decline-224153088.html

2. https://finance.yahoo.com/news/stock-market-news-today-tech-roars-back-as-sp-500-nasdaq-surge-ahead-of-earnings-200038261.html

3. https://www.cnn.com/2024/07/23/politics/pennsylvania-state-police-commissioner-reveals-stunning-info-about-trump-shooting/index.html

4. https://www.usatoday.com/story/money/investing/2024/07/19/us-stocks-uninterrupted-crowdstrike-outage/74469633007/

5. https://get.ycharts.com/resources/blog/an-advisors-guide-to-elections-and-the-markets/

Chart sources: https://get.ycharts.com/resources/blog/an-advisors-guide-to-elections-and-the-markets/

Understanding Your Role and Responsibilities as a Power of Attorney

We wanted to provide you with some essential information regarding the role and responsibilities associated with being named a Power of Attorney (POA).

This is a critical aspect of estate planning and can have significant implications for both you and the principal (the person who has granted you this authority).

What is a Power of Attorney (POA)?

A Power of Attorney is a legal document that grants a person (referred to as the agent or attorney-in-fact) the authority to act on behalf of another person (the principal). The extent of this authority is explicitly outlined in the document. It can range from very broad, sweeping powers to limited authority for specific circumstances.

There are different types of POAs:

  • Immediate POA: Goes into effect as soon as it is signed.

  • Springing POA: Only becomes effective if the principal loses capacity. However, the Springing POA is less favored in estate planning because proving incapacitation can be challenging.

It’s crucial to understand the specific terms outlined in the POA document you hold, as this will dictate the scope of your responsibilities and powers.

Your Responsibilities as a POA

Being named as a POA means you have the legal authority to act on someone else’s behalf. This role is often utilized when the principal becomes ill, disabled, or is otherwise unable to manage their affairs. Here are some common responsibilities you may be expected to undertake:

  • Financial Management: Oversee and manage the principal’s financial affairs.

  • Bank Accounts: Have direct access to and manage the principal’s bank accounts.

  • Insurance Decisions: Make decisions regarding the principal’s insurance policies.

  • Estate Documents: Maintain possession of and manage estate documents.

  • Tax Returns: File the principal’s tax returns.

  • Safe Deposit Box: Access and manage items in the principal’s safe deposit box.

  • Real Estate Transactions: Sign documents related to the sale or purchase of real estate.

  • Detailed Record-Keeping: Keep meticulous records of all financial transactions, including bills paid, assets sold or traded, and income collected. It’s also important to document your own expenditures if you seek compensation for your efforts (e.g., saving gas receipts, mileage, etc.).

What a POA Cannot Do

While the POA grants significant authority, there are limits to what you can do:

  • Write, Amend, or Revoke Estate Plans: In most states, you cannot write, amend, or revoke a will, trust, or other estate planning documents.

  • Vote on Behalf of the Principal: You cannot vote in public elections on behalf of the principal.

  • Make Decisions Beyond the Document: You cannot make decisions that are not explicitly stated in the POA document.

  • Transfer Assets to Yourself: You cannot transfer the principal’s assets into your own name unless explicitly authorized.

  • Borrow or Lend Money: You cannot borrow or lend money on behalf of the principal unless the POA document specifically grants this authority.

Durable Power of Attorney

One important aspect to understand is the concept of a “Durable” Power of Attorney. A Durable POA remains in effect even if the principal becomes physically or mentally incapacitated. This means your responsibilities and authority will continue regardless of the principal’s health status. Without this durable component, your role as POA would cease if the principal becomes incapacitated.

Final Thoughts

Being named a POA is a significant responsibility and a powerful tool in estate planning.

It is essential to fully understand the scope of your authority and the duties you are expected to perform.

Inflation relief

After months of simmering inflation reports, it looks like inflation finally eased slightly in April.1

Are prices stabilizing? Can we breathe a sigh of relief?

Let’s dig a little deeper.

What’s inside the latest inflation report?

Economists typically look at two major inflation gauges: the Consumer Price Index (CPI) and the Personal Consumption Expenditures Index (PCE).

In the latest CPI report, we learned that overall “headline” inflation rose 3.4% (year-over-year) in April.1

Analysts also look at “core” inflation by stripping out volatile food and energy costs – that metric climbed 3.6%, the lowest since April 2021.

Why? Because food and energy have very volatile prices that can skew monthly data.

The chart below shows just how far inflation has come down since its 2022 peak.

Are we finally done with stubborn inflation?

I think it’s too soon to call since we’re just looking at one report.

Let’s see what the next few months show before celebrating.

We know inflation is still higher than anyone would like.

But, the April data is an improvement after months of hotter-than-expected data.

It could also be an optimistic sign that the Fed may still be able to achieve its 2% inflation target.

What does tamer inflation mean for investors?

Lower inflation points to a slowing economy and could give the Fed room to cut interest rates this year.

Traders have been telling themselves (and each other) that lower rates are coming in 2024 so they cheered the latest data.1

Stubborn inflation is the one obstacle holding the Fed back from lowering rates so any nudge in the right direction often triggers a rally.

Other signs also point to a cooling economy.

Multiple indicators of labor market strength are trending downward, which suggests that growth is slowing.

Just 175,000 jobs were added in April, missing expectations. Earlier jobs numbers were also revised downward, which often means early estimates were too optimistic.2

Wage growth, another sign of a strong labor market, has also slowed significantly in recent months.3

Wage gains surged in 2021 and 2022 as employers struggled to attract workers but have been slowing down since.

So what does the latest data mean for you?

Markets are highly influenced by the timeline of future rate hikes this year.

That means news that the economy is slowing down may be treated as good news because it continues to build the case for lower rates.

On the other hand, signs that the Fed might keep rates high (or even raise them) may provoke more selloffs.

For long-term investors, these gyrations don’t make much difference to our goals and outcomes.

We’re more interested in trends and the bigger picture.

 

Be well,
Dr. Chris Mullis, PhD, CFP®

 

———-

Sources:

1. https://www.cnbc.com/2024/05/15/cpi-inflation-april-2024-consumer-prices-rose-0point3percent-in-april.html

2. https://www.bls.gov/news.release/empsit.nr0.htm

3. https://www.atlantafed.org/chcs/wage-growth-tracker

Chart sources: https://fred.stlouisfed.org/series/CPIAUCNS#0, https://fred.stlouisfed.org/series/CPILFENS, https://www.atlantafed.org/chcs/wage-growth-tracker

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