Broker Check

Is Good News Actually Good Again?

December 15, 2023

Good news is starting to actually be treated like good news again, but slowly. For much of 2023 investors have felt relatively positive about the economic data that we have seen. Except for a stretch from the middle of August to the end of October where interest rate fears caused panic, investors have felt bullish about the stock market and economy. Even to the point of reaching new all time highs on the Dow as of writing this. 

However, we found ourselves in much of the year waiting for employment and spending numbers to soften. Investors groaned when unemployment numbers would come out stronger than anticipated and cheered when that data would come out and show a softening or higher unemployment or less consumer spending. Which seems backward, because it is. But why? 

Well all of 2023 we found ourselves afraid of interest rates and what the Fed might do. Do we have more interest rate hikes? Will rates be higher for longer? What does that mean for the economy? 

And those fears were brought on by the Fed as they continued to say that they want to see a softening in unemployment and consumer spending before they felt more comfortable in their fight to bring down inflation. So as a response to this, low unemployment and higher consumer spending was seen as a bad thing because it could potentially spark higher inflation again. Even when historically this data would always be seen as extremely positive. 

But that tide is slowly starting to turn. That good news of low unemployment and strong consumer spending is finally starting to be viewed as a positive again. 

The reason for this change is the fact that we are becoming more and more confident that we will be able to have a “soft landing” which is the ability to bring down inflation without causing a recession. The Fed’s most recent statements showed this as well as they are furthering the pause of interest rate hikes and we are now seeing the potential projection of interest rate cuts in 2024. Because of this, good news can finally become good news again. 

We are in one of the rare times that everyone wants to see the economy grow, but to not grow too much. Just the right balance to show that we are able to bring down inflation while still growing the economy. 2024 will hopefully be a year that we continue to see historically good data as good news again as the picture of a soft landing becomes clearer.