Hello,
As we start the new year, we can't help but reflect on what a wild financial journey 2024 was. We’re sure many of us can recall the headlines proclaiming it was a year ripe for recession.
However, time has shown that America's ingenuity and determination have not only kept a recession at bay but also helped U.S. labor productivity soar. Just take a look at the graph below. Even at a glance, it's clear America has figured out the "secret sauce" for labor productivity. 
What's the secret?
America's technological innovation, paired with its fiscal policy (which often drives corporate policy), seems to be responsible for the drastic difference in comparisons above. We want to be clear that it's the pairing of technology and fiscal policy that is so unique to the U.S. Either of these alone would most likely account for only a small percentage of America's productivity boom.
Let's break this down a bit more.
When we say "fiscal policy," we specifically mean policies that incentivize having a presence on American soil (which helps us flex our macroeconomic muscles when needed) and create jobs for U.S. workers. The amount of hours Americans work is also part of this. By and large, the U.S. sticks to a 5-day workweek. Compared to industrialized countries like Japan (who just announced a move to a 4-day work week), this provides workers more opportunity to earn and produce. This has, in part, been what has helped America stay within the top three ranked countries in productivity growth over time.
The newer component of America's punch-up to productivity is the number of world-class patents in advanced digital technologies U.S. companies hold. Just look at how artificial intelligence companies are doing and how much talent they're attracting at the moment, and you'll get an idea of what's helping productivity soar.
Continued innovation and increases in productivity growth are key to long-term market and economic growth. However, the stock market has not moved up in a straight line with past innovations, and many effects of innovation can take years to materialize. So the question now is, how will the U.S. maintain its productivity gains?
It's hard to say, but emerging technologies like targeted generative AI for specific industries are poised to unlock new levels of efficiency. Combine this with some of America's most cherished companies increasing their wages and the potential for federal investments in key industries, and there's a lot to be optimistic about.
We’re also looking at utilizing AI to improve our office efficiency. More on that to come!
Enthusiastically,
Your Eagle Wealth Team |
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| | What is the Social Security Fairness Act?
You may have heard about the recently signed Social Security Fairness Act and wondered what it was and how it might affect you.
The Social Security Fairness Act eliminates two longstanding provisions for Social Security: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These rules previously reduced Social Security benefits for retirees who receive pension income from non-covered employment.
This legislation is projected to result in an average monthly increase of $360 for eligible public sector workers, as well as their spouses and survivors. Additionally, it includes lump-sum payments for over 2.5 million individuals to compensate for benefits missed in prior years, which could amount to several thousand dollars per recipient.
Qualified workers include police, firefighters, postal workers, public school teachers, and other government employees. Those who qualify need not apply for these increases, which will happen automatically. The Social Security Administration is still reviewing how to implement the law, so there is no timeframe for these increases for the moment.
Between this and the recent 2.5 percent cost of living adjustment, many households are poised to receive a financial boost. If you want to revisit your retirement strategy due to the pending change in Social Security income, please let us know.
USA Today, January 6, 2025
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The Week on Wall Street
Stocks roared back last week, fueled by upbeat Q4 corporate reports and economic news that stalled inflationary fears.
The Standard & Poor’s 500 Index rose 2.91 percent, while the Nasdaq Composite Index advanced 2.45 percent. The Dow Jones Industrial Average led, picking up 3.69 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, added 2.00 percent.1,2 Goldilocks is BackThe “Goldilocks” narrative—an economy that’s neither too hot nor too cold—made a comeback last week.
Tuesday's Producer Price Index report showed that wholesale prices rose less than expected in December—one piece of evidence suggesting a cooling economy.3
Stocks jumped out of the gate Wednesday after the December Consumer Price Index (CPI) report showed core inflation (minus volatile energy and food prices) rose less than expected. Investors also cheered Q4 reports from a handful of money center banks and positive news out of the Middle East.4
Stocks took a breather Thursday before pushing higher again on Friday.5
The S&P and Dow Industrials had their best week since early November, and the Nasdaq saw its best weekly performance since early December. The yield on the 10-year Treasury note fell roughly 20 basis points over the week.6,7 Slowing InflationInvestors welcomed the inflation reports, believing wholesale and consumer prices might trend lower in 2025.
First, producer prices came in at 0.2 percent, which was less than the 0.4 percent increase anticipated. Then consumer prices came in at 2.9 percent, slightly elevated, but the real story was core inflation. When you subtract out food and gas prices, CPI saw its smallest monthly increase since July.8 |
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Source: YCharts.com, January 18, 2025. Weekly performance is measured from Monday, January 13, to Friday, January 17. TR = total return for the index, which includes any dividends as well as any other cash distributions during the period. Treasury note yield is expressed in basis points.
Past performance is not a guarantee of future results. Any companies mentioned are for informational purposes only, and this should not be considered a solicitation for the purchase or sale of their securities. Any investment should be consistent with your objectives, time frame, and risk tolerance. |
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1. The Wall Street Journal, January 17, 2025
2. Investing.com, January 17, 2025
3. CNBC.com, January 14, 2025
4. The Wall Street Journal, January 15, 2025
5. CNBC.com, January 17, 2025
6. MarketWatch.com, January 17, 2025
7. CNBC.com, January 17, 2025
8. The Wall Street Journal, January 15, 2025 Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security. Copyright 2025 FMG Suite. |
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