We had only two major economic news releases last week, but the week ahead will be a busy one.

With the declines yesterday, U.S. markets are now in an official correction. Just to get the terminology straight, a “correction” means a 10-percent decline, while a "bear market" indicates a 20-percent decline. As of the close yesterday, the Dow was down 10.3 percent, and the S&P 500 was down 10.1 percent. The decline really accelerated at the end of the day—bringing the indices into official correction territory.

January’s data was quite good, and improvements in many areas suggest ongoing growth into 2018. Job growth picked back up, and both consumer and business confidence pushed higher. Fed policy remains stimulative, and recent increases in long-term rates steepened the yield curve—often a positive sign. Overall, this month’s data indicates that some of the weakness of the past couple of months may be passing and that the end of the cycle may not be as close as that data had suggested. Some trends do continue to be somewhat worrisome, however, so we’ll be keeping an eye on the economic risks.

Last week was a big one for economic data, with four major reports. Despite the weaker tone of the data in recent weeks, the latest news was quite positive. All indicators either met or beat expectations—sometimes by a lot.

Wow, that was a bad week. After pushing to new high after new high, the market suddenly rolled over. We saw multi-hundred-point declines on several days, culminating in a 666-point drop in the Dow on Friday. This is reportedly the sixth-largest decline ever.

Today’s big news is the jobs report. It is the single most informative and important economic report there is. As such, it always gets a great deal of attention. In general, the news this month is quite good—but not perfect.

January was another great month for the markets. All three U.S. indices were up by at least 5 percent, as were international markets. There was a bit of a pullback at the end of the month, as interest rates moved up to levels we haven’t seen in years. Indeed, fixed income took a bit of a hit on these higher rates.

There is a market adage that states, “as goes January, so goes the year.” We certainly should hope this is the case for 2018, as January was another month of great stock market returns. The U.S. indices were up by 5 percent or more, while international markets—both developed and emerging—did the same. The news was not all good, of course, as markets pulled back at month's end. Given the strong gains up to that point, however, it looks likely to be just profit taking, rather than a harbinger of something worse.

Over the past two days, we have had the first sell-off in quite a while. With the Dow falling more than 500 points, is it time to stock up on canned goods and supplies? I don’t think so.

With President Trump scheduled to give the annual State of the Union address tonight, I thought it would be a good time to consider the economic state of the union. As usual, of course, I am going to pass on the politics and instead take a big-picture look at the economy.