- The U.S. unemployment rate (U3) increased to 4% in January after hitting an almost 50-year low of 3.7% in September 2018 and again in November 2018. The unemployment rate has now increased for two straight months.
- There’s no doubt that the government shut-down muddied the waters for all labor market data last month, but the impact on the unemployment rate may not have been that severe. Furloughed workers still had jobs and their positions were still counted in the Establishment survey that populates the headline unemployment number.
- This week’s chart views equity returns from the cycle low in unemployment for the ten economic cycles since 1948 (we do not count the brief drop in the unemployment rate between the 1980 and 1982 recessions). Based on the historical evidence, if the September to November 2018 period does indeed turn out to be the cycle low in unemployment, investors should expect substantially lower equity returns, larger drawdowns and higher volatility in the short term.
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The material shown is for informational purposes only. Any opinions expressed are current only as of the time made and are subject to change without notice. This report may include estimates, projections or other forward-looking statements; however, forward-looking statements are subject to numerous assumptions, risks, and uncertainties, and actual results may differ materially from those anticipated in forward-looking statements. As a practical matter, no entity is able to accurately and consistently predict future market activities. Additionally, please be aware that past performance is not a guide to the future performance of any investment, and that the performance results and historical information provided displayed herein may have been adversely or favorably impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be inferred that these results are indicative of the future performance of any strategy, index, fund, manager or group of managers. The graphs and tables making up this report have been based on unaudited, third-party data and performance information provided to us by one or more commercial databases. While we believe this information to be reliable, SpringTide Partners bears no responsibility whatsoever for any errors or omissions.
Index benchmarks contained in this report are provided so that performance can be compared with the performance of well-known and widely recognized indices. Index results assume the re-investment of all dividends and interest. The information provided is not intended to be, and should not be construed as, investment, legal or tax advice. Nothing contained herein should be construed as a recommendation or advice to purchase or sell any security, investment, or portfolio allocation. This presentation is not meant as a general guide to investing, or as a source of any specific investment recommendations, and makes no implied or express recommendations concerning the manner in which any client’s accounts should or would be handled, as appropriate investment decisions depend upon the client’s specific investment objectives.
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