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Weekly Economic Perspectives

Weekly Economic Perspectives

December 15, 2023

Weekly Economic Perspectives is intended to share timely and relevant market and economic news and data that we are observing, which help to frame our outlook.  We hope that you find this timely and interesting.

November 2023 Challenger Jobs Report

The Challenger job report for November of 2023 was released last week.  The findings were concerning.  Job cuts from January - November totaled 686,860, a 115% increase from the same period in 2022.  The highest January - November period was in 2020, however, that period aside, the next highest year-to-date total through November was in 2009 when there were 1,242,936 job cuts.  You can read the entire report here.

The CPI Report Was Mixed...

Headline CPI decelerated to a year-over-year number of 3.14% while Core CPI remained at 4% year-over-year.  Core Services Ex-Shelter, which is another measure that the Fed likes to pay attention to, actually accelerated to 4.08% on a year-over-year basis.  

While the Fed indicated on Wednesday that they seem to be leaning towards cutting rates vs. leaving them unchanged at the March meeting in 2024, the biggest task facing the Fed is whether inflation continues to disinflate or if it remains above their stated goal of 2%.  

*Source: Hedgeye, BLS

A Melancholy Small Business Outlook

The National Federation of Independent Businesses released their November 2023 report.  Here are the key findings direcly from the report:

- A net negative of 17% of small business owners reported higher sales in the past three months, which remains unchanged from the prior month of October.  This is the lowest reading since July 2020.

- Small business owners expecting better business conditions increased one percentage point but remains squarely in negative territory at a net negative 42%.

- 30% of small business owners plan to raise compensation in the next three months, up six points from October and the highest reading since December 2021.

To summarize, small business are still undergoing a slowing of sales (see weak consumer), they don't expect conditions to get better and their overhead costs are going up, meaning that their margins are getting squeezed.  A similar datapoint in public markets is the accelerating rate of delinquencies among smaller, lower quality companies.  You can read the entire article here.

Have a great weekend!

Glenn Moore

Gordon Asset Management, LLC Investment Policy Committee