Insights into the Current Economic Landscape: Stock Market Trends, Inflationary Pressures, Job Creation, and Economic Outlook

The short-term performance of stock markets can vary based on a range of factors, including economic conditions, corporate earnings, monetary policies, and geopolitical events. Investing should always be looked at long term, whether it is an investment in Real Estate, a Business, or the Stock Market. The current year-to-date return for the NASDAQ 100 Index is 31.67% as of June 7th, 2023, and the S&P 500 total years-to-date returns are 11.59% as of June 7th, 2023. Most of the gains in markets were driven by mega market cap technology companies. It would be very unusual for the stock market to go back to the low or bottom we saw in 2022 after recovering to date. The S&P 500 broke a 12-month negative streak in April 2023. It is not typical for negative returns to persist so long; considering historical records, the market’s historical stats have shown to push forward into a bull run for a good 8-10 years after a downturn in the markets, as we experienced in 2022. Considering these facts, it is an excellent time to invest as there is a lot more clarity on the trajectory of where the markets are headed with a positive outlook.

Inflation:

In Canada, the Inflation rate this year has slightly risen in April to 4.4% from 4.3% in March. In March, inflation was at a 19-month low of 4.3%. Consumer prices have soared, and the Bank of Canada has once again tightened monetary policy by raising rates by 0.25%. The last such increase was in January this year. This increase comes as no surprise, as it is the Bank of Canada’s target to reach an inflation rate of 2% by the end of 2023. The increase in the prime rate was necessary to achieve the inflation target. The next Bank of Canada rate announcement will be Wednesday, July 12th, 2023, and the US Federal Reserve Bank will be meeting on June 14th, 2023, for its next interest rate decision.

Job Creation US and Canada:

The US economy added 339,000 jobs in the month of May, soaring past expectations. Meanwhile, in Canada the month of April this year, over 41,000 jobs were added, which are mostly part-time jobs. The employment data for May will be released later this week, on Friday, June 9th, 2023.

US and Canadian Economies:

The outlook for the US and Canadian economies is subject to multiple factors, such as fiscal policies, trade dynamics, investment trends, and domestic and global economic conditions. Economic growth rates can vary across sectors and regions within each country. Gross Domestic Product (GDP) is widely used as a measure of a country’s economic performance and the total value of all goods and services produced within its borders during a specific period. It serves as an indicator of the overall economic health and size of a nation’s economy. GDP in Canada increased slightly to 3.1% in the first quarter of 2023. The US economy grew by 1.3% in the first quarter of 2023, which is slightly higher than expected. Combined with the strong job numbers noted above, the US and Canadian Economies remain resilient despite inflationary pressures.

This commentary represents Westgroup Financial Management Inc’s views at the date of publication, which are subject to change without notice. Furthermore, there can be no assurance that any trends described in this material will continue or that forecasts will occur; economic and market conditions change frequently. This commentary is intended as a general source of information and is not intended to be a solicitation to buy or sell specific investments, nor tax or legal advice. Before making any investment decision, seek input from your financial advisor. You may not reproduce, distribute, or otherwise use any of this article without the prior written consent of Westgroup Financial Management Inc.