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Surprises & Steadiness ⛰️
Did you know that despite expert forecasts, the US economy not only dodged a recession but accelerated, with the S&P 500 surging by 24% last year?
Equity Eats
February 22, 2024
Surprises & Steadiness ⛰️
Did you know that despite expert forecasts, the US economy not only dodged a recession but accelerated, with the S&P 500 surging by 24% last year?
This underscores the simple fact that in order to understand the present, you need to understand the past, a fact that is all too often ignored by the experts of today.
In this edition of our newsletter, we’ll be examining the following aspects of the market:
US Job Market Still Looks Firm: First, we unpack the steadfast US job market, showcasing an unemployment rate defying the odds 💪
US Economy Humming Along: Next, we delve into the economy's unexpected growth spurt, proving skeptics wrong as the GDP outpaces forecasts 🎶
Oil Prices Edging Up, But Still Contained: Finally, we explore the oil market's calm amidst geopolitical storms 🛢️
Join us for a concise exploration of economic resilience and surprises, where the expected paths often diverge into realms of unforeseen stability and prosperity.
US Job Market Still Looks Firm 💪
If you had to pick one piece of economic data to follow, weekly jobless claims, which comes out every Thursday morning at 8:30 am, is the one 🥇
It provides the most reliable reading of the US economy, and it gets released every week, which is as frequent as you can get.
The numbers tell us that just 215k new people are filing for unemployment payments each week, which is historically quite low, and consistent with an unemployment rate below 4%.
This is an indication that the US economy remains strong 💰
US Economy Humming Along 🎶
There is a constant debate about the state of the US economy.
Most economic forecasters have been predicting a recession since early 2022.
But the forecasts could not have been more wrong ❌
The economy grew throughout 2022 and accelerated in 2023, which explains why the S&P 500 surged by 24% last year.
While most economists have given up on their recession calls, they continue to call for a significant softening in the economy.
The Atlanta Fed has a GDP tracker which suggests that the economy is on pace to grow 2.9% in 1Q 2024, which is well above what any economists have been predicting.
Remaining bearish has been costly 🐻
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Oil Prices Edging Up, But Still Contained 🛢️
Before the war in the Middle East broke out, Brent crude oil prices were trading above $90 per barrel.
When the war broke out, oil forecasters were convinced that oil would surge well above $100 per barrel, and $150 per barrel was considered a distinct possibility under a worst-case scenario 😱
Instead, oil prices sank as low as $73 per barrel and are now just below $83, well below levels before the war started.
Moral of the story:
The experts usually don’t have the right answers 🥴
