January 12, 2025
JOB MARKET HEATS UP: In December, the U.S. economy added 256,000 net new jobs. The unemployment rate decreased from 4.2% to 4.1%. 223,000 of those new jobs were in the private sector, and only 33,000 were government jobs. Average hourly earnings rose 0.3% from the prior month. Throughout 2024, approximately 75% of new jobs were in three sectors, healthcare, hospitality, and government. In December, the new jobs were broader including retail, professional services, and information and finance.

THE LABOR MARKET IS DOING GREAT, OH NO!: There is a general concern now that if the labor market, and the overall economy, does well, then the Fed may be finished with rate cuts, and the stock market will take some time to adjust to that reality. This past week, the surprisingly strong December labor report sent stocks downward resulting in a negative week. Wage growth was moderate, which is a positive factor for the Fed as it indicates inflationary pressure from wages may be moderating.

LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.

WATCH OUT FOR INFLATION: If the labor numbers spooked investors, watch out for this week's (Wednesday) inflation report. The producer price inflation data for December is due on Tuesday. If those reports show signs of persistent inflation, it will add fuel to the fire that the Fed will not be lowering rates any time soon. Retail sales data for December will be released on Thursday. These reports will likely play a big role in what markets do next week.
AGEISM: A recent survey of American workers over forty indicated that 99% say there is at least some degree of ageism in the workplace. 92% said they felt pressured to conceal their age. 88% said they sometimes alter their behavior or language to fit in with younger co-workers. I'll have to watch out for that after I turn forty.
THE SEARCH FOR MORE AFFORDABLE LIFESTYLES: We recently began working with a couple who moved from California to Idaho to find a more affordable area. Another new client revealed that they are considering moving from Texas to Arkansas because they can afford a better home in that state. A recent report using state-to-state movement data shows that California became the top outbound state last year, beating out Illinois for the first time in ten years. Idaho is ranked as the top inbound state with Georgia as number two. South Carolina, North Carolina, and Tennessee have seen the biggest increase in inbound migration for the last three years. Overall, interstate moves in 2024 were 8% lower than the year before.
RENTS STAYING THE ABOUT THE SAME: The national median monthly rent decreased by 0.6% in December compared to the prior month. Year-over-year, rent growth is -0.6%. Since the second half of 2022, rents have fluctuated a little but the overall trend has been slightly downward. This comes after record growth in 2021 and the first half of 2022. Typical rent prices are still about 20% higher than January 2021.
MONTHLY SPENDING: The Motley Fool recently produced a report indicating how much the average U.S. household spends. The average household spends $6,440 per month. 33% of spending was on housing. The next highest cost is transportation at 17%. Food is 13%. The rest of the spending is on personal insurance and pensions (12%), healthcare (8%), entertainment (5%), cash contributions (3%), apparel and services (3%), education (2%), miscellaneous (2%), personal care (1%), and alcohol (1%).
BOB DOLL'S PREDICTIONS: Every year, Bob Doll, CEO of Crossmark Global Investments, sticks his neck out and makes ten predictions for the new year. He got a majority right (seven out of ten) right last year. One of his incorrect predictions was that the U.S. would experience a mild recession in 2024. What does he predict for this year?:
Economic growth slows and the unemployment rate rises past 4.5%.
Inflation remains sticky, fails to reach the Fed's 2% target, and causes Fed funds rate to fall less than expected.
Treasury 10-year yields trade primarily between 4% and 5% as credit spreads widen.
Earnings fail to achieve consensus 14.6% earnings (will be closer to 10%) and every sector will have up earnings.
Stock volatility will rise.
Stock prices decrease by 10%.
Equal-weighted portfolios will beat cap-weighted portfolios, and value will beat growth.
Financials, energy, and consumer staples will outperform healthcare, technology, and industrials.
Congress passes Trump tax cut extension, reduces regulation, but tariffs and deportation are less than expected.
Department of Government Efficiency (DOGE) efforts make progress but fall woefully short of $2 trillion per year of savings.
THE FIRES: The fires continue to rage in the Los Angeles area. The personal devastation is heart-breaking. We do not really know how expensive this will be yet, but it could push past Hurricane Katrina's $200 billion mark as the most expensive in U.S. history. Unfortunately, many insurance companies saw this coming and bailed out before the fires. In the Pacific Palisades, I saw one report that 69% of homeowners lost their insurance before the fires began. In July, State Farm canceled 1,600 policies. With many private insurers moving out, many had to go to California's state-run FAIR plan. That plan is now set to lose billions.
HAS ANYONE EVER TOLD YOU?: If you have been reading this email for several years, you have probably heard this before, but it happened to me again last week. I was sitting in an all-day conference at a table with eight other financial advisors. At the end of the days events, a man to my right came up to me and said, "Has anyone ever told you that you look just like....." I thought in my mind, "Is he going to say 'Scott Van Pelt?'" Sure enough. This has happened to me well over a dozen times at this point, so there must be something to it. I just wish that Scott Van Pelt was a tad better-looking.
PUBLIC SERVICE ANNOUNCEMENT...TAKE THE BATTERY OUT!: I went outside to take down our Christmas lights this weekend. As I'm doing it, I hear a "beep beep beep" sound. I could not figure out what it was, and ignored it momentarily. It did not stop, and I listened more carefully. I decided to walk toward the sound, and it took me to a neighbor's house (neighbors we hardly know). I was not sure it was their house, but I thought that if it was a carbon monoxide detector there could be a real problem. Two cars were in the driveway, and lights were on inside, but no one came to the door. So I came back to my house, and my wife called the police. A county police car quickly showed up. The officer got out, and listened, and walked to the same house. He was a bit more persistent in getting the neighbor to come to the door. As it turned out, they had thrown away a smoke detector with the battery still in it! It was beeping from their trash can. I feel a little embarrassed that we called the cops on my neighbors, but I felt compelled by the worst case scenario.

Have a great week!
Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.

Douglas R. MacGray, J.D., C.F.P. ®
President
Stonecrop Wealth Advisors, LLC
Direct | Cell | Fax
(610) 628 4545
“The mystery of human existence lies not in just staying alive, but in finding something to live for.” Fyodor Dostoyevsky, The Brothers Karamazov
"Let not the wise man boast of his wisdom or the strong man boast of his strength or the rich man boast of his riches." Jeremiah 9:23
SOURCES:
JOB MARKET HEATS UP: https://www.bls.gov/news.release/empsit.nr0.htm AND https://www.wsj.com/economy/jobs/jobs-report-december-2024-unemployment-economy-c8031ef9?mod=economy_lead_pos1
WATCH OUT FOR INFLATION: https://www.wsj.com/economy/central-banking/week-ahead-for-fx-bonds-u-s-inflation-data-due-as-focus-remains-on-bond-markets-34b7c9d9?mod=economy_lead_pos2
AGEISM: https://rethinking65.com/99-of-older-workers-see-ageism-in-the-workplace/?utm_campaign=5516360-1-11-25 RT65%2C Worker Sues J%26J For Using Express Scripts&utm_medium=email&_hsenc=p2ANqtz-9YKB0plHlIw--xl_x-BoNxn7mMXsI8KCoQ_p3XeOAJs0bsn_FZXcEhTsQpIxU3Rrgj54dv3Ov8DTWW5iZhi_il3dcGCtH036NRDkimJE__RGXD7mU&_hsmi=341941014&utm_content=340999817&utm_source=hs_email
THE SEARCH FOR MORE AFFORDABLE LIFESTYLES: https://rethinking65.com/demand-for-affordable-housing-driving-significant-population-shifts/?utm_campaign=5514027-1-10-25 RT65%2C The State Where People Are Moving&utm_medium=email&_hsenc=p2ANqtz-8ZO8GvZm3MyKYdUpQfpDDTdrqd1w153hJkt_GeHpSCTF7ZaLi9neZTD6z_umKDYZfV2AoGD_Xw--BFG5UZVl3TiCqbWT1a_cq6ivRRHEs_Z75fO5E&_hsmi=341848814&utm_content=341850158&utm_source=hs_email
BOB DOLL'S PREDICTIONS: https://www.crossmarkglobal.com/wp-content/uploads/BDWEB-PPT-1Q25.pdf
RENTS STAYING THE ABOUT THE SAME: https://calculatedrisk.substack.com/p/asking-rents-mostly-unchanged-year-dc9?utm_source=post-email-title&publication_id=443155&post_id=154086378&utm_campaign=email-post-title&isFreemail=true&r=s86er&triedRedirect=true&utm_medium=email
MONTHLY SPENDING: https://www.fool.com/money/research/average-monthly-expenses/
THE FIRES: https://www.msn.com/en-us/money/markets/la-wildfires-will-affect-us-economy-for-decades/ar-BB1rjF7e
(c) 2025 Anno Domini, Stonecrop Wealth Advisors, LLC, All Rights Reserved
Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.
SDG
*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.
*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.
*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.
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