Economic Update

Kicking Off Q4 2023

We’ve written frequently in this newsletter about a wide range of factors affecting the U.S. economy: the effect of rising interest rates on borrowers and the housing market, the effect of inflation on buying power and consumer confidence, and the strength of the job market.

While we don’t have a crystal ball, we do have long experience in all phases of the macroeconomic cycle and are dedicated to helping you protect and grow your wealth. As we enter the fourth quarter of 2023, here are just a few of the events and numbers that we’re keeping an eye on.

• The inflation rate fell to 3.7% in September. (It was at a 40-year peak of 9.1% in mid 2022.)
• Interest rates on 30-year mortgages are close to 8%. In August, housings starts dropped again in August, and pending homes sales fell 7.1% month-over-month.
• Hiring in September did not slow down as many analysts expected. The U.S. Bureau of Labor Statistics announced on October 6 that total nonfarm payroll employment rose by 366,000 in September while the unemployment rate remained unchanged at 3.8 percent. The average monthly gain for the prior 12 months has been 267,000.
• Oil prices have been rising and at the end of September, the American crude benchmark (West Texas Intermediate) was trading at its highest per barrel price ($91) since November of 2022.
• The yield on 10-year U.S. Treasury bonds reached 4.88% on October 6 (briefly before falling back to 4.80%), the highest rate in 16 years.
• Stocks had their worst month in September: The S&P 500 fell 5%, the Nasdaq Composite 7%, and the Dow Jones Industrial Average 4%. Historically, September is the worst month for stock performance.
• On October 5, President Joseph Biden announced $9 billion in student debt relief for 125,000 Americans.
• A stopgap funding bill will keep the government operating until November 17.
• Israel declared war on Hamas on October 8.
• Consumer confidence fell in September as “consumers continued to be preoccupied with rising prices in general . . . the political situation and higher interest rates.”

We’re constantly assessing how these factors (and more) affect your plan to build and protect wealth. Please don’t hesitate to contact us whenever you have questions or concerns.

Eyes on the Middle East

On Saturday October 7, Hamas attacked Israel, and Israel responded by declaring war. To a person, our team is heartbroken by the terrible loss of innocent life, and we pray for a quick end to the violence.

As your financial partner, we are carefully monitoring the impact that this geopolitical crisis has, and could have, on your portfolio and want you to know that, while crises like the current one affect the markets, the magnitude and duration of the impact typically relate to the business cycle.

For example, Russia’s annexation of Crimea and nuclear threats from Iran and North Korea occurred during periods of economic expansion. The impact of these events was minimal and short-lived.

The impact that Russia’s invasion of Ukraine has had on the markets continues, at least in part, because this war has coincided with rising inflation and interest rates and supply chain disruptions during and after a worldwide pandemic.

One of our goals in creating and maintaining a diverse investment portfolio for you is to minimize, to the extent possible, the impact geopolitical crises have on your wealth. Of course, if you have any concerns, please don’t hesitate to contact us.

Lifestyle

Last Chance to View a Solar Eclipse in 2023

Those of us in the D.C. area will be able to view 20% to 30% of today’s annual solar eclipse. The eclipse lasts only about two and half hours, beginning at 12:01pm, reaching its maximum at 1:19pm, and ending at 2:38p.m. Check out the path here.

If you are selenophile rather than heliophile, you won’t want to miss the partial lunar eclipse on October 28. This event will pass even more quickly: only 22 minutes before it becomes visible at 6:04pm (in Baltimore) and ends at 6:26p.m.

How We Help

So, You’re Thinking of Buying Real Estate . . . 

Over the last three quarters, mortgage rates and active listings for housing have risen, and home prices have fallen. Meanwhile, the price of commercial real estate has bounced back. Is this the best time to buy residential or commercial property? Or maybe undeveloped land?

Instead of a one-size-fits-all answer, let’s look at:

• Your goals.
• The role real estate plays (if any) in your current investment portfolio.
• The real estate you already own.
• Your current situation: age, debt, other assets, earnings potential, etc.
• Your risk tolerance.

Every day we help people determine the timing and type of real estate they might add to their portfolios. We’re happy to help you assess the potential of a specific piece of real estate both by walking through the numbers and the property itself to get an accurate picture.

If you are thinking of adjusting or adding to your real estate portfolio, please don’t hesitate to reach out. We’re happy to help in any way we can.

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.