Following last week’s robust, significantly-higher-than-expected US employment numbers for April – and an unemployment rate that fell from 3.6% to 3.4% — all eyes this week should be on the inflation numbers and any Federal Reserve commentary about them. The current expectation is that various reports will show an economy that is conclusively not yet in recession, accompanied by inflation that is firmly “stuck” at 4.75%-5.0%; an untenable situation from the Federal Reserve’s standpoint. The Fed also does not seem to think that they will be lowering rates soon, although the market has a different outlook. The market expects 2-3 cuts from the Fed by year end. The peak rate for this cycle is expected to be 5.25%, with a target rate of 4.25%-4.75% by year end. Regarding the debt ceiling, the political standoff associated with the possibility of millions of people not receiving their checks from their social security, Medicare and other federal government checks will likely force a base case “kick the can” solution for a few quarters. On the wealth planning front, some taxpayers have thought about moving to another state to save on taxes. Several factors may have encouraged wealthy taxpayers to move to lower-tax states in recent years; the $10,000 SALT cap, the adoption of remote work, and increases in income tax rates on high earners in states such as New York and California.
Click Here to Read the May 8, 2023, Economic Commentary
Click Here to Read the May 8, 2023, Investment Commentary
Click Here to Read the May 8, 2023, Wealth Planning Commentary
