Weekly Market Commentary 02/03/2017

The traditional Groundhog Day event took place this past week, but the economy shows no sign of repeating the dismal performance of a year ago. Recall that 2016 started off on a terrible note, thanks largely to harsh weather that threw a damper on a wide swath of activities. The economy grew by a tepid 0.8% pace in the first quarter, defying the high expectations of the Federal Reserve, which was ultimately forced to scale back its planned four rate hikes for the year to the one it eventually implemented in December. Among the immediate casualties of the sputtering start to the year was the job market, as companies drastically cut back hiring in January. Nonfarm payrolls increased by only 126,000 during the month, sharply weaker than the 277,000 average monthly increase during the fourth quarter of 2015. Job growth did snap back in the following two months, but the tone for a disappointing first-half of the year was clearly established.