Some of the best charts from the week that tell a story about the markets and economy.

Recession Fears Down Sharply
The fear of a recession has significantly subsided. Investors held a prevalent view last year that a recession would happen within 12 months, and the likelihood of this situation surged to 77% during November 22′. However, the probability has since decreased and is now as low as 24%.

It’s notable that in the past comparable high readings happened near market bottoms. The previous market lows occurred on March 09’ and March 20’. It’s possible that history repeats itself and the October low holds as the bottom.

Stocks are Off to Hot Start
The US stock market has had an exceptional start to the year, which is quite the opposite of the slow beginning in 2022. However, it is worth noting that historically, the second half of February has been one of the weakest periods for stocks. It wouldn’t surprise me if we have some short term weakness.

Resilient Job Market
The US added 517,000 jobs in January, beating expectations and showing little erosion in the labor market. The unemployment rate also dropped to 3.4%, its lowest level since 1969, pointing towards a robust labor market and a positive sign for the economy.

Resilient Job Market

Record High Credit Card Debt
Due to inflation, Americans are resorting to credit card debt to maintain their standard of living. While this development is worrisome, it is noteworthy that the debt payments of households, as a percentage of disposable income, are at 9.75%, which is below the historical average.

Time is Your Friend
This chart serves as a powerful reminder of the benefits of long-term investing. Despite experiencing significant events such as the tech bubble, 9/11, the global financial crisis, a pandemic, historic inflation, and geopolitical conflicts, investors who capitalized on market downturns have reaped substantial benefits.

In fact, the lowest annual return over a 30-year period was 7.8%, which occurred if one invested at the peak just before the Great Depression in 1929. This indicates that the worst 30-year return over the century was a remarkable gain of 850%.

S&P 500 rolling 30 year returns

And that’s it for this week. Please continue to follow our blog for the latest updates on what we see in the markets and economy. Have a great weekend everyone!

George Maroudas
Twitter @ChicagoAdvisor

Disclaimers / Sources:

Recessions fear down sharply for BofA Global Fund Manager Survey.
Second half of February is One of the Weakest times of the year from Ryan Detrick.
Best and worst starts through Valentine’s day from George Maroudas. Data from YCharts.
US Credit card debt jumps 18.5% and hits a record $930.6 billion CNBC.
Household Debt Service Payments as a Percent of Disposable Personal Income from FRED.
S&P 500 Rolling 30 Year Returns from Ben Carlson.

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Please consult your financial advisor regarding your specific situation. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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