The last few weeks have been chaotic, confusing, and frustrating. From a bad jobs report, to a plummeting market with quick recovery, the months of July and August have been difficult to digest. However, many who do not pay close attention to the stock market or reports from the Bureau of Labor Statistics may have not noticed. So does this all matter to the average worker who is just trying to pay bills and save for retirement? The answer is yes, well probably. Let’s review.
A Bad Market
After a bad jobs report and no change in interest rate from the Federal Reserve, the stock market took a steep dive. The S&P 500 and Dow Jones both dropped drastically the morning after the jobs report, but this was a Friday and more distruction would come. Over the weekend, trading projected to be weak (and Bitcoin fell $15K), and when many started trading Monday morning, the market continued its terrible trajectory.
Many feared the market’s performance was a precursor to a recession, and that the U.S. would fall into a rough economic climate. But have no fear, because Tuesday rolled around. Tuesday afternoon brought major gains and calmed the market. Strong recovery followed after Tuesday for the rest of the week. What does this mean? You could have checked your retirement account on Wednesday, and checked back the next Wednesday and noticed little-to-no change. But there’s more to the story.
A Bad Jobs Report
Many contributed the market sell-off to the bad jobs report from the BLS, which stated that unemployment increased, and the labor market was quickly cooling off. While many may have not noticed, the poor jobs report triggred the Sahm Recession Rule. To oversimplify, the Sahm Rule is an indicator that with poor performance in unemployment for three months, the country has already begun a recession. July’s job report would be the third month of poor performance, and if this rule is accurate, the U.S. is currently in a recession. Many reading this are thinking “it does not seem like we’re in a recession.” And most likely, if you’re thinking that, you are either right, or just haven’t seen signs of it in the public yet.
Recession? All Hope is Not Lost
Some fear that a recession is among us, while others thing that a few bad reports is common place. We won’t know for several months whether or not we are living in a time of recession. And while it’s difficult to know early when a recession has started, but you can treat your personal finances with respect to the possibility. This does not mean its time to sell-off all your assets or even dump stocks. It simply means its time to live responsibly and build a strong plan for yourself and your family. We recommend you build your financial literacy. If you are just beginning, check out our first podcast here! If you’re looking to advance your knowledge in the stock market, find out what we have to offer here.
