Why the Fed Could Stay on Hold?

Last Edited by: LPL Research

Last Updated: November 09, 2023

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Jeffrey Roach (00:02):

 

Here in this latest edition of the LPL Econ Market Minute, I'll share a few important charts that I think explain why the markets are getting a brief reprieve as investors can expect the Fed to stay on hold. First, let's talk about multiple job holders. Yes, we've had a recent increase in the number of individuals holding multiple jobs. As of October, roughly 5% of working people have more than one job. That's just about where we were prior to the shutdowns. Now of course, that was back when inflation was in the high ones, so if you think multiple job holders are just trying to keep up with the rising cost of living, you should expect this graph to continue to shoot upward. We could see this metric increase a few more points as wage growth moderates and workers need to take another job in order to make ends meet, but at this point, we are nowhere near levels that would cause concern.

 

Jeffrey Roach (00:56):

 

Second, most small businesses expect real sales to be lower in the next six months. As illustrated in the chart. Practically, we see firms becoming more cautious about future revenues, so investors could expect an increasing number of firms to lower guidance as sales projections weaken. Now, one positive consequence is markets will expect the Fed to stop raising rates as the labor market loosens and businesses activity slows down. Third, serious delinquencies are rising for both auto loans and credit cards as shown in the chart over 6% of card balances or over 90 days past due. This is the highest rate since 2011 when the economy was emerging from the great financial crisis. Now, not surprising, serious delinquencies and credit card balances are higher than for auto loans, but for auto loans, the current delinquency rate is highest since 2010. The difference today is the penalties for those past due balances is much greater than back 13 years ago when interest rates were near zero. And as we've said before, consumer spending has got to pull back when these bills come due. If you want more insights on global market trends, follow us on social media and take care.

 

In this edition of the Econ Market Minute, Jeffrey Roach, Chief Economist for LPL Financial, shares a few important charts that explain why the markets are getting a brief reprieve as investors can expect the Fed to stay on hold.

 

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