Nonfarm payrolls rebounded in January following a decline in December, but the pace remains below what’s needed to quickly drive employment back to pre-Covid levels.
In January, nonfarm payrolls rose by 49,000 after falling a downwardly revised 227,000, according to the U.S. Bureau of Labor Statistics. As Figure 1 illustrates, employment growth has slowed from the fast pace we saw in the middle of last year.
As January goes, so goes the year, according to the January market indicator. But is the theory popularized by the Stock Trader's Almanac correct?
- When the S&P 500 Index2 finished higher in January, the remaining 11 months were up 86.0% of the time, with an average gain of 11.9%.
- When the index lost ground in January, the index rose 60.7% of the time, with an average gain of 1.7%.
Source: LPL Research, data back to 1950. The S&P 500 Index is unmanaged and cannot be invested into directly. The modern S&P 500 was launched in 1957. The S&P 90 was used prior to 1957. Past performance is no guarantee of future results.
The U.S. BEA reported on Thursday that Gross Domestic Product (GDP), which is the largest measure of economic output, expanded at a 4.0% annualized pace in the fourth quarter, down from Q3’s record 33.4% gain.
The graphic below highlights the steep decline in GDP in the first and second quarter and the subsequent rebound. GDP has recovered 76% of its decline through Q4.
On Thursday, the U.S. BEA will release fourth quarter Gross Domestic Product (GDP), the broadest measure of the value of goods and services.
- Economists surveyed by Econoday estimate 4.1% annualized growth.
- The Atlanta Fed’s GDPNow model tracks growth at 7.5%.
- Q3 came in at a record 33.4%.
Estimates are subject to change.