Clearnomics

The Fed is on pause - but for how long? The Fed acknowledged there is a higher level of uncertainty for the economic outlook because of trade policy. ?????? ????????????????, ?????????? ???????????????????????? ?????? ???????? ???????????????????? ?????????????????????????? ???????? ?????????????? ?????????? ???????????????? ?????????? ?????? ???????? ??????????????????????. Balancing inflation and growth has become more difficult for the central bank given uncertainty around fiscal and economic policy. The Fed kept interest rates unchanged, in a range of 4.25% to 4.5%. Chair Powell sought to calm investors concerned about a rapidly deteriorating growth outlook by highlighting areas of strength: ?? Real wage growth ?? Low unemployment ?? Job openings to worker available Powell also said tariff inflation could be transitory, but noted there are several moving parts, including the impact from other potentially offsetting policies from the Trump administration. Still, the outlook for growth was downgraded and inflation was increased, but the rate outlook stayed the same. Key Changes to the Fed’s 2025 Outlook (vs. December): ?? Decreased economic growth to 1.7% from 2.1%? ?? Increased unemployment to 4.4% from 4.3% ?? Increased Core PCE inflation to 2.8% from 2.5% The Fed is planning for only two interest rate cuts in 2025. However, keep in mind that these plans can change quickly. The bottom line? Inflation is likely to remain the top driver of monetary policy going forward, as the Fed remains data dependent.

Will consumer pessimism lead to a recession? Consumer sentiment is approaching the historic low of mid-2022. Households are worried that tariff-driven inflation will dent their purchasing power. ?????? ????????????????, ?????????? ???????????????????????? ?????? ???????? ???????????????????? ?????????????????????????? ???????? ?????????????? ?????????????? ?????????? ???????????????? ??????????. How consumers feel and how much they spend are typically related. This also affects investor sentiment, which continues to show weakness. However, this relationship has been unusual the last several years: ?? Although consumers may feel uneasy in this economic environment, spending has generally remained robust. ? ?? Retail sales rose 3.1% year-over-year in February. While still a healthy increase, it was below the historical average of 4.7% and missed expectations. There are a few reasons the consumer continues to spend: ?? Rising wages ?? Low unemployment ?? Elevated job openings (i.e., opportunity) ?? Household net worth at record level That said, savings rates are below historical averages, consumer debt is rising, and not all households have benefited from rising asset prices. While these developments will need to be watched, they all remain at reasonable levels for the time being. ? ???????????? ????????? ?????????????? ???????????????? ???????????? ?????????????? ?????? ?????? ??????????????, ???????????????? ???????????????? ?????????????? ??????????????. This underscores the importance of seeing the bigger picture to stay invested in these challenging markets.

Inflation has improved, but is the Fed still on pause? The latest CPI and PPI inflation data provided some relief to investors as the rate of inflation slowed from prior months. This suggests inflation is moving in the right direction. It's a welcome change as worries about rising inflation have been reflected in sentiment and market expectations. The latest data didn’t include tariff impacts, which remain a wildcard. Some comfort can be found in tamer inflation that is not running higher on its own ahead of tariffs. For advisors, these insights may help clients maintain perspective on economic trends amid heightened recession fears. The State of Inflation - 3 Key Takeaways CPI ?? Reversed a two-month trend of inflation moving higher.? ?? Shelter prices increased 4.4%, the lowest increase since December 2021.? ?? Supercore inflation, which excludes food, energy and shelter, is now 2.2%, getting closer to the Fed’s 2.0% target.??? PPI ?? Producer prices stabilized in February, and Core PPI fell 0.1%. ?? While core prices are still higher 3.4% year-over-year, the improvement from January was substantial. ?? This could help support corporate margins in the near-term. What does it all mean for the Fed? ?? The steady inflation readings give the Fed time to remain patient with monetary policy as uncertainties about Trump’s fiscal policies unfold.? ?? The Fed is likely to remain on pause at its March meeting, though markets still expect 2 to 3 cuts in 2025. The bottom line? Inflation was a positive and important development, showing a healthy and improving pricing environment ahead of tariffs.

Are we headed for a recession? This is a question some advisors may be hearing from clients and prospects. Some economic data shows signs of slowing, but not all. Year-to-date the S&P 500 and Nasdaq are 4.5% and 9.5% lower, respectively. Remember that many investors and economists have been worried about a recession for the past three years, showing how hard it is to accurately anticipate downturns. Recessions occur when the business cycle enters its later stages, or an external shock takes place, such as a pandemic or financial crisis. The current business cycle has not contracted just yet. That said, it may be slowing after four years in a row of solid growth. Of course, the possibility of a trade war represents an outside shock to consumers, businesses, and global supply chains, even if it is being used as a negotiating tactic.?? Amid the flurry of tariff headlines, markets have forgotten about the reasons for their post-election optimism: the possibility of pro-growth policies. Taking it all together, it translates into: ?? Economic direction has become hard to quantify. ?? Market pullbacks are a natural part of investing. The S&P 500 experiences pullbacks on a regular basis, with history showing that 5-10% declines typically occur several times per year. Bottom line? While being prepared for recessionary risks is prudent, maintaining a long-term mindset when it comes to your financial goals is also important. Our Chief Market Strategist, Lindsey Bell, dives into this and more in this video. *** This video was created using Clearnomics Studio. Learn more here: https://lnkd.in/eTMG5Z7c ***

Markets have stumbled, the Nasdaq is near correction territory, and investors are worried about a recession. What does the latest jobs report tell us? The February jobs report showed steady gains but government layoffs haven’t yet shown up in the data. + 151,000 net new jobs created, faster than January but below expectations + Unemployment ticked up slightly to 4.1%, still near historic lows + Wages rose +4.0% year-over-year + 6 sectors added more than 10,000 jobs + Health care, financial activities, transportation and warehousing led growth Government jobs increased 11,000, but within that category, federal jobs fell 10,000. Other recent data show that layoffs jumped in February to their highest since 2020 due to DOGE cuts. While it is unclear how federal worker layoffs will impact jobs data and the economy, it’s worth noting that the federal government accounts for less than 2% of the labor force. While the next jobs report doesn’t come until April 4, investors can find clues about the health of the labor market in weekly initial jobless claims. Last week’s jobless claims were in an acceptable range. The Fed is likely to remain on pause at its meeting from March 18-19 given steady job gains. Markets currently expect 3 cuts in 2025. For advisors, providing clients with a broader perspective on economic growth and the labor market can help guide them through choppy markets.

Lots of tariff talk driving market swings of late. Was great to share my thoughts post the Trump / TSCM announcement yesterday on CNBC. https://lnkd.in/e4dRYgjG

Market swings have left investors unsettled. With all this economic and policy uncertainty, how can advisors put February’s market moves in perspective for clients and prospects? - Investor sentiment reached new lows. + The stock market hit new all-time highs in the middle of the month. - Tariffs and inflation fueled worries about growth.? + Corporate earnings grew at the fastest pace since 2021. - The Magnificent 7 fell 8.1% over the month.? + All but two sectors are positive year-to-date. While the stock market ended the month lower, bonds and other asset classes outperformed, demonstrating the importance of portfolio balance. Our Chief Market Strategist, Lindsey Bell, dives into the February market drivers in this video. The bottom line? Investors should stay disciplined as markets adjust to tariffs, inflation, AI trends, and more. *** This video was created using Clearnomics Studio. Learn more here: https://lnkd.in/gYKWZknJ ***

Everyone is focused on taxes except for Congress. The likely extension of the Tax Cuts and Jobs Act has helped support markets since the election. However, taxes have fallen behind trade, immigration, defense, and other priorities in Congress. How can advisors address tax policy changes with clients and prospects? Our Chief Market Strategist, Lindsey Bell, dives into how to have a great conversation on this topic. ***This video was created using Clearnomics Studio. Learn more here: https://lnkd.in/eNw3qrZx ***

President Trump’s inauguration marks a significant political shift amid market and economic uncertainty. Many investors are asking their advisors about potential policy changes and their market implications. The president has already signed a flurry of executive orders. While policy shifts can create uncertainty, history shows that markets have adapted well to various political climates. Understanding key economic factors like taxes, trade, the national debt, energy, and immigration helps frame these discussions in the broader context of long-term financial planning. Advisors play a crucial role in helping clients maintain perspective during periods of policy change. At Clearnomics, we provide advisors with clear, objective market insights to help guide important client conversations about policy changes and their financial goals.

2024 was defined by important and surprising trends. What were the most important shifts that could impact investors in the coming year? At Clearnomics, our mission is to support advisors with client-friendly insights. Feel free to share these perspectives as you guide clients toward financial success in 2025.