Market Update
A Sigh of Relief
The United States government finally reached an agreement to raise the debt ceiling. The government can still pay its bills, and it made people feel more confident about the future. This contributed to the rise in the stock market, and many indices reached their highest level in 2023. A robust federal employment report also contributed to the rally.
The Irrepressible Labor Market
Last week’s employment data showed that the labor market remains stout after over a year of sharp interest rate hikes.
The report exceeded market expectations in the growth of new jobs while reflecting a deceleration in wage growth. However, the strong job market could make some inflation components to stay elevated.
The stickier inflation could mean that the government may not want to lower interest rates this year.
Recession Indicators Worsen
The recession indicators continue to show slow, steady deterioration. The general picture continues to be one of a slow-growth economy inching towards but not yet definitively in a recession.
From our perspective, the threat of a "rocky landing" persists. Slow growth continues with recession risk elevated. Still, we have not seen a sufficiently dramatic break in certain indicators to indicate that the economy is definitively in contraction.
We continue to watch credit conditions, particularly the availability of credit from small banks to small businesses. To that end, we will pay close attention to deposit flows in the wake of the debt ceiling deal. As always, we will continue to update you with our thinking as events unfold.
Below is a snapshot of a recession indicator dashboard. Red indicates that the particular metric exceeds average recession range. Tan indicates that the particular metric is within recession range.
Uncharted Waters
One useful economic metric to watch is the amount of money flowing through our financial system. In general, economists use the term "M2" to describe the money supply. You can think of it like a thermometer. When thermometers go up it's hotter and when they go down it's cooler. Similarly, when M2 is up the economy is hotter and more money is flowing and when M2 is down the economy is cooler and less money is flowing. This can make it more challenging to borrow money and can cause the economy to slow down.
Recently the M2 "thermometer" has taken a substantial decline and has experienced negative growth when compared to last year. We have not seen this occur since 1958. All other negative growth periods have occured during a depression or at least a recession. For the consumer and the economy as a whole, this may be a troubling sign.
Source: FRED, United States Census Bureau, as of 1/1/1900 – 3/31/2023
The Fed Raises Rates. Again.
Powell delivered on the promise he made in March to increase rates last month. At the most recent Fed meeting in May, they increased the short-term rates by 0.25%, just as the financial markets expected. No surprise.
"Economic activity expanded at a modest pace in the first quarter," he said at the press conference following the May meeting." Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated. The U.S. banking system is sound and resilient."
Yet despite Powell's confident tone, investors are cautious. In the accompanying charts, you can see that the Standard & Poor’s 500 index is essentially unchanged in the past 12 months. And yet, investors have pulled more cash to the sidelines in 2023.
It's our belief that interest rates are near, if not at, their highs and will remain so through the rest of 2023. As indicated by the recession dashboard above, if a recession were to occur it is looking like it won't be until 2024. Until we get there, we don't expect the Fed to decrease interest rates. As a result, we see interest rates on savings accounts and mortgages remaining relatively stable in the short term.
Stacey Interviewed on Poised for Exit Podcast
Our very own Stacey Stelter was interviewed on the Poised For Exit Podcast, where she shared about her path from elementary school teacher to co-founder of GTS Financial. Her passion for helping others has been a consistent theme in her personal and professional life, and we’re grateful she is applying that gift with our team and clients.
"Stacey's passion for finance and helping people achieve their financial goals shines through in her story...I highly recommend giving this podcast a listen." Julie Keyes - Poised for Exit
Listen to the podcast:
From Teacher to Financial Founder: The Inspiring Journey of Stacey Stelter and GTS Financial
Overcome Procrastination
In our fast-paced and demanding world, it's easy to feel overwhelmed by the myriad of responsibilities and expectations that weigh us down. When overwhelmed, it can be challenging to regain a sense of balance and clarity...which may lead to procrastination. However, by implementing a few actionable steps, you can alleviate the burden of overwhelm and regain control of your life. In this article, we will explore the insights shared by author Jenna Kutcher, who offers five practical steps to navigate through overwhelm and make the most of your days.1
1- Set boundaries on checking social media and email
It is way too easy to be distracted by technology. When you need to focus on a task, make a conscious effort to close all unnecessary tabs on your browser, including social media, and your email. In particular, an open email tab or app can lead to constant interruptions and dictate the course of your day. Kutcher suggests creating strict boundaries around your phone - keeping it physically separated from you and turning off notifications can help you to avoid mindless scrolling and improve your productivity. Most email messges are not urgent and can wait, as much as we often tell ourselves they need to be attended to immediately.
2- Prioritize creation first
It is important to give space to your creative endeavors. Oftentimes we only give ourselves permission to circle back to creation after all our concrete tasks and to-do items are checked off. Focusing on creative projects when energy and attention are at their peak allows for better productivity and prevents creative tasks from being neglected.
3- Set up a space conducive to work
Want a workspace conducive to productivity? Start with your chair. Beyond the obvious health benefits associated with proper posture, a study in the European Journal of Social Psychology stated that sitting up straight and sticking your chest out can increase your productivity and creativity. Even if you don't have a permanent office or work space, find yourself a flat surface for your computer, a comfortable chair that supports good posture, and keep essential items like your water bottle, headphones, planner, and writing utensils nearby. Kutcher suggests that a well-organized workspace can enhance energy levels, motivation, and overall well-being during work.
4- Set a timer, execute your tasks, move on.
For those tasks that tend to get bumped to the bottom of your to-do list because you simply don't have time to take it all on right now, try time blocking. Kutcher suggests setting a timer and fitting as much of one task into that time window. She says, "Whether it’s cleaning the house or knocking out your inbox or writing that blog post, there’s something about a timer that motivates us and helps us to focus on one thing eliminating the desire to multitask."
This is a great way to replace the expectation of completing a task with the realistic intention of moving it forward.
5- Focus on the big picture
When faced with an overwhelming number of tasks, it becomes crucial to prioritize and simplify your to-do list. Starting from the big picture, try breaking down your responsibilities into manageable chunks and focusing on what truly matters. By evaluating tasks based on urgency, importance, and alignment with your goals and values, you can identify those that can be delegated, postponed, or eliminated altogether. This process allows you to regain control and focus on the tasks that will have the most significant impact on your well-being and progress.
There is no one-size-fits all approach to time management, and even a strategy that works for you one week may not be helpful for you the next. However, if you can lean int your intuition, listen to what your mind and body needs, and prioritize your needs from there, you should be able to get into a rhythm that not only keeps you moving forward and makes you feel good too.