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Obsidian Market Update 06/10/2023

Economic Update

Government and Consumer Spending

Two of the biggest economic news stories of the past few weeks were the extension of the debt ceiling and the May jobs report. Only one surprised almost all forecasters. Can you guess which one? It’s the May jobs report that came in far stronger than anyone expected. According to the U.S. Department of Labor’s Bureau of Labor Statistics (BLS), the U.S. economy added 339,000 jobs in May, the unemployment rate inched up .3% to 3.7%, and “Job gains occurred in professional and business services, government, health care, construction, transportation and warehousing, and social assistance.”

Is low unemployment too much of a good thing?

The Board of Governors of the Federal Reserve System and its Chairman, Jerome Powell, cannot control the unemployment rate, but they can adjust interest rates to try to control inflation. In fact, the central bank has raised rates ten times over the past 14 months. The question is: Given the latest jobs report, will it do so again at its June 13-14 meeting?

We are not in the business of making predictions, but we are in the business of watching economic developments and helping you respond to them wisely. We’ll be watching to see whether employers increase salaries to compete for workers in a tight labor market. If they do, inflation may continue. We’ll know more on June 14 when the BLS releases its report on the Consumer Price Index on June 14.

Consumer Spending

The Fed has consistently stated that it wants to bring the inflation rate down to 2% and is using interest rate increases to help accomplish that goal. The decreases in the rate of inflation may indicate that the Fed’s actions have had some effect: At the end of April, inflation had fallen to 4.93% (from April of the 2022)—a significant drop from 6.04% at the end of February (February 2022 to 2023) and 6.4% in January (January 2022-2023). Still, many analysts think that the jobs report may not have been robust enough to cause the Fed to raise rates again in June. The Fed’s meeting at the end of July, however, may be a different story. As always, we’ll keep you posted.

Government Spending

President Biden and the Congress reached a last-minute agreement (The Fiscal Responsibility Act of 2023) to suspend the current debt ceiling until January 1, 2025, and increase the limit the following day “to accommodate obligations issued during the suspension period.” (H.R. 3746).

As we wrote in the May 20 issue of this newsletter, standoffs over the debt limit are not uncommon; each side gives and takes, and this time around was no exception. The agreement:

  • Imposes caps on some spending (military and nonmilitary discretionary).
  • Eliminates some funding for the Internal Revenue Service.
  • Prevents President Biden from pausing payments Federal student loans without consent from the Congress except during a qualifying emergency. (Borrowers should expect to resume payments on June 30 or as late as August 29. We recommend that borrowers check with their loan providers.)
  • Adjusts work requirements for those receiving benefits under the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families. Requirements will apply to people up to 55 years old (from the current 50 years old), with exceptions for veterans and homeless people.

You can read about additional provisions of the Bill here.


Spend an Afternoon on the Golf Course

Hank Aaron said about golf, “It took me seventeen years to get three thousand hits in baseball. It took one afternoon on the golf course.” Let’s face it: Most of us will never see our handicaps fall into the single digits, yet we continue to spend—and enjoy–hours hitting a small ball into only slightly bigger holes on courses in some of the most beautiful places in the world.

There are so many beautiful golf courses across the globe that two of most beautiful in the U.S. —Oakmont and Torrey Pines—don’t even appear on Travel & Leisure’s eleven most beautiful courses in the world. On that list are some places you might not expect: Whistling Straits in Sheboygan County, Wisconsin, The Dunes in Wanning Hainan, China, and Dinosaur Mountain in Gold Canyon, Arizona. If , like us, you can’t make it to Wisconsin, China, or Arizona this year, we hope you’ll take advantage of the fresh air and green grass of your favorite local course.

How We Help You… Spend Your Money

A significant majority of our clients are good savers. In fact, they are great savers. They’ve saved more money than they’ll ever need and yet are reluctant to spend it. When review their Lifestyle Protector Process documents, we inevitably find that these same people have set goals for themselves that go beyond financial security. In fact, it’s achieving financial security that makes it possible for them to achieve their other goals. Their bucket lists may include travel, helping children buy a first home, or start a business or giving to a favorite charity.

One of the great parts of our job is that we get to urge people to get out there and live! The old saying “You can’t take it with you” maybe well worn, but it’s true. 

Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Securities are offered through Triad Advisors, member ​FINRA/SIPC.​ Obsidian Personal Planning Solutions, LLC, and Obsidian Personal Planning Solutions, Inc, are not affiliated with Triad Advisors.


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