Week In Review
Iranian forces launched a missile attack at two Iraqi airbases housing U.S. soldiers in response to the U.S. drone strike which killed Iranian general Qassem Soleimani. According to Iranian officials, the attack concluded Iran’s official response to the Soleimani killing.
Oil prices fell while equities and yields rose as markets believed the missile strike was an end to shooting hostilities between the U.S. and Iran. While avoidance of all-out war is clearly positive, tensions remain extremely high in the region. Any new developments could send markets in the opposite direction.
U.S. nonfarm payrolls rose by 145,000 jobs in December, slightly short of expectations. October and November job gains were revised lower by a cumulative 14,000 jobs. The unemployment rate was unchanged at 3.5%. Average hourly earnings rose just 0.1%, two-tenths of a percent behind the predicted 0.3% increase.
The jobs report, while not terrible, fell short of expectations. Earnings growth continued to slow with year-over-year growth at an 18-month low of 2.8%. This is slightly worrisome, as consumers are the driving force behind current economic expansion, and is likely due to weakness in the manufacturing sector, which created far fewer jobs in 2019 than in the previous year.
California Governor Gavin Newsom’s proposed budget calls for nearly $2 billion in spending for emergency management related to wildfires and disasters. Governor Newsom’s plan includes adding firefighters, water infrastructure and technology upgrades, and preventative vegetation thinning according to Bloomberg.
This year’s proposed wildfire spending is a significant increase over last year’s $1 billion budget item. In the last two years, California has experienced extensive wildfire damage and rolling power blackouts related to the fires. The increase in spending will allow California to better prepare for and combat future wildfires.