What You Need to Know - February 2023

February 15, 2023

The latest insights from Commerce Trust on the economy, policy moves and market performance  

Markets. It appears investors were eager to put 2022’s market performance behind them based on the performance of the capital markets since the start to the year. The S&P 500 Index was up over 6% and the Nasdaq returned more than 10% for January. International equities also saw gains for the month. Among fixed income securities, most bond sectors were positive for the period, with investment-grade bonds topping 8.6%, as measured by the Bloomberg U.S. Corporate Bond Index.

Inflation. The cost of living rose 0.5% in January as measured by the consumer price index (CPI), indicating the pace of inflation may not be falling as quickly as policymakers hoped. Despite the monthly increase – the largest in three months – inflation slowed on a yearly basis to 6.4%, according to the Bureau of Labor Statistics. The core CPI Index reading, which excludes volatile food and energy costs, declined slightly to 5.6% on a year-over-year basis.

Jobs. The U.S. economy added a staggering 517,000 jobs in January, bucking a trend of five consecutive months of moderating job growth. While some analysts attribute the surprising jobs report to seasonal factors, the unemployment rate fell to 3.4%, the lowest level in 54 years, according to the Department of Labor. The report also showed a slight increase in the labor force participation rate ؘ– an estimate of the active workforce in the economy – to 62.4%.

Trade. The Department of Commerce reported the U.S. trade deficit surged 12.2% in 2022 as the gap between domestic imports and exports widened to a record $948 billion. Among the factors attributed to the jump in the deficit are rising inflation, higher energy costs and stronger demand for imported goods. Consumers have been able to buy more imports due to the relative strength of the U.S. dollar.

Source: The Wall Street Journal, Bureau of Labor Statistics, Department of Labor, Department of Commerce.

The opinions and other information in the commentary are provided as of February 15, 2023. This summary is intended to provide general information only and may be of value to the reader and audience.

Past performance is no guarantee of future results. This material is not a recommendation of any particular investment strategy, is not based on any particular financial situation or need and is not intended to replace the advice of a qualified tax advisor or investment professional. While Commerce may provide information or express opinions from time to time, such information or opinions are subject to change, are not offered as professional tax, insurance, or legal advice, and may not be relied on as such.
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Commerce Trust is a division of Commerce Bank.