Have you ever looked back on a period of your life when you were trending higher and didn't realize it at the time? I feel the US economy may be in a similar spot right now. And recognizing it matters, especially when thinking about your overall portfolio. Allow me to explain.
Starting with employment: Headline payrolls in January rose by 130,000. That's approximately 70% of all job gains in 2025. Even more impressive, labor force participation for prime-age Americans hit its highest level since January 2000. [1] For context, I was 30 years old back then.
On inflation: 12-month annualized flexible-price CPI --- think fuel, oil, fresh produce, and eggs --- fell from 1.6% to 0.7% in January. Sticky-price inflation, which includes rent and medical care, also edged down from 3.1% to 3.0%. [2]
And on the growth side: US manufacturing rose 2.7% in January, new business applications increased 7.2%, and housing starts were up 6.2%. Not every indicator is positive, but the trend is clearly upward. [3]
So what should you do with this data? Historically, when the economy trends upward, consumers have more disposable income, they spend more, companies grow their sales and profits, and there tends to be a correlation --- not a guarantee --- between rising profits and rising equity prices. That's why I was surprised to hear the Treasury Secretary note that 38% of Americans have zero household exposure to equities. [4] I'm not suggesting anyone shift their entire portfolio into riskier assets, but if you've been hesitant about equities or feel underweighted in growth-oriented assets, this may be a good time to revisit your allocations.
Looking ahead to March and the Spring season, I'll be watching the Tech sector closely, specifically whether software services companies get some price relief. We're currently in what I'd call an Artificial Intelligence doom trade, where the market fears AI will either displace entire businesses like IT consulting and software providers, or significantly limit their pricing power. These companies were previously trading at high multiples when AI was seen as a tailwind for growth. Now it's being viewed as a headwind. This will be worth watching. Well, that's it for now. See you next month.
1. Bespoke, Feb 13, 2026
2. Fed Reserve Bank of Atl - https://www.atlantafed.org/research-and-data/data/sticky-price-cpi
3. https://www.census.gov/economic-indicators/
4. Feb 7th interview on CNBC - https://www.cnbc.com/video/2026/02/06/treasury-secretary-scott-bessent-trump-accounts-may-be-president-trumps-greatest-legacy.html