My colleague Sam Millette, manager, fixed income on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam!

My colleague Sam Millette, manager, fixed income on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam!

We received a number of important economic data releases last week, with a focus on business confidence, the international trade report, and the December jobs report. Fewer jobs than expected were added in December, although improvements to the household survey and participation rate caused the unemployment rate to fall notably to end the year. This week will be packed with updates, with reports to come on December inflation, retail sales, and industrial production, as well as consumer sentiment to start January.

This morning’s jobs report came out, and we have all seen the data. Job growth is down, but the unemployment rate is also down. Hiring is weak, but more people have jobs. This makes perfect sense, not. What’s going on here?

After yesterday's monthly looking back/looking ahead post, I had a request to do the same thing for 2021 and 2022. While I haven’t taken this approach in the past, it seemed like a good idea to bring this format to the 2022 outlook in the context of 2021. So, let’s take a closer look.

December was a solid month for both the economy and the markets but a difficult month for medical news. The Omicron wave of the COVID-19 virus drove new case counts to all-time highs at year-end. Job growth kept improving, however, and consumer confidence and spending also continued to grow. Business confidence and investment remained strong, and the markets reacted to the positive news. The economic news continued to be strong through year-end, although we should note it was based on backward-looking data. The outlook for January is more mixed. The Omicron wave is likely to start showing up in the economic data. It’s quite possible it will also influence the markets.

The year closed on a strong note, with the Dow and S&P showing gains. The Nasdaq struggled a bit, but it ended December in the green. On the medical front, the omicron variant drove COVID cases to new highs. Still, the economic data kept getting better. Consumer confidence numbers bounced back, and consumer spending kept growing. Further, business confidence and investment remain very high.

There were no major economic data releases last week. This week, however, we’ll see a number of important updates to start the new year. The focus will be on business confidence, the minutes from the most recent Fed meeting, the international trade report, and the December employment report.

As we close out the new year, it has been one to remember. Or, possibly, better to forget. In my own case, we had planned on having friends over for the evening. But, unfortunately, one was exposed to COVID, and then we found out late this morning that we had been exposed to COVID as well. This far, all the tests are negative—so wish us luck. But the risks are definitely on my mind at the moment.

For the third year in a row, Commonwealth sponsored the Massachusetts Conference for Women. Since 2005, this annual conference has been providing connection, motivation, inspiration, networking opportunities, and skills-building workshops for thousands of women. As we did in 2020 and 2019, my colleague Giovanna Zaffina and I are sharing our experiences and thoughts.