The unemployment rate is the number of people that are unemployed that are looking for work. Keep in mind that this is the number of people in the workforce, not the number of people across the whole economy. Why does this matter? There are two impacts on the market.
Money, Spending & Savings
The first impact reflects in that as more people work they have more money to spend on goods and services. The more direct impact is as more people work, the more they save which can lead to investing. As people invest at a more active rate the number of stocks and bonds stay the same which tends to lift prices. This is a direct impact on how our markets and investors’ portfolios perform. One month versus another may not impact your portfolio directly but, over time, as we see more people becoming employed, we see more people saving. This is how the economy works and portfolios grow. It’s important for us to see positive employment growth and unemployment shrink each month because that will hopefully impact investments.
Trey Booth, CFA®, AIF®
Senior Vice President
Email Trey Booth here
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
No strategy can ensure success or protect against a loss.
Stock investing involves risk including potential loss of principal.
Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.
Podcast: Play in new window | Download