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02.10.2023 by David M. Smith

The Job Market is Hot, Hot, Hot

The Federal Reserve has been aggressively raising rates for almost a year to cool the economy and slow hiring. All signs point to the economy slowing as well as a slowdown in the demand for goods. But slowing down hiring has been much more difficult. Last Friday, the January jobs report was released. It showed employers added 517,000 workers, and the unemployment rate dropped to 3.4%, the lowest since 1969. Job gains had been slowing the previous few months (see chart), but January’s gains were almost double December’s. Economists were stunned as they were only expecting 185,000 additional jobs. If job gains continue to be strong keeping unemployment low, the Fed will continue to raise rates. AP News

FAI 02.10.23

Chart: Bureau of Labor Statistics

Fed Chair Comments: In his first comments since the strong jobs report, the Fed Chair, Jerome Powell, stated the strong labor market underscores why bringing inflation down will take longer with higher interest rates than many have been anticipating. He also stated that bringing inflation down to 2% is not going to be smooth, but bumpy. The Fed will have one more jobs report to digest before its next rate decision meeting in March. WSJ

What is ChatGPT and What’s All the Hype About? ChatGPT is an acronym for Chat Generative Pre-Trained Transformer and it is all over the news. Launched this past November by a firm called OpenAI, it is an artificial intelligence (AI) chatbot, meaning it is capable of taking written input or questions from users and creating human-like responses. If you want to have a conversation with someone from history such as Shakespeare or Christopher Columbus, ChatGPT can create one. That may be a whimsical example, but it can also write property listings for realtors, stories for reporters, or even term papers for college students. Truth is, we are not sure how it will evolve but it could greatly increase human productivity. Satya Nadella of Microsoft says it’s the most exciting thing he’s seen since he’s been CEO. Microsoft is integrating ChatGPT in their search engine and potentially into other applications like Office 365. Firms like Google are working on their own AI versions. So, get ready to hear more about AI chatbots as they are coming your way. ChatGPT – Wikipedia   Yahoo Finance   CNBC

I went to the OpenAI website and signed up to give ChatGPT it a whirl. I asked the program some general questions about quantum computing or who was the best author in history and I must say, I received very human-like, logical answers. Then I inputted “Weekly newsletter written in the style of David Smith of Robinson Smith Wealth Advisors.” With me only asking a few questions prior to that, so the chatbot had very little history on me, I got the output below. If this is what is produced with very little history, imagine what the output will look like if the history is robust. Wow! OpenAI - ChatGPT

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Financial Planning/Investment Strategy Corner:              

When it Comes to Social Security, Patience is a Virtue: Social Security is an important cornerstone of many retirees' income stream. Social Security’s Full Retirement Age (FRA) to receive the full benefit is age 66 or 67 depending on your age, and you are eligible to take it as early as age 62 but your benefit will be permanently reduced. For example, for those who turn 62 this year and claim Social Security, their benefit will be reduced by 30% for claiming now as opposed to waiting until age 67. Another option is delaying taking Social Security past FRA and by doing so you receive an 8% increase each year until age 70. A guaranteed 8% return is hard to pass up. Benefits taken at age 70 are 76% higher when adjusted for inflation than retirement benefits taken at 62. In our retirement planning for clients, we find most clients benefit by taking Social Security later and we are not alone. Recent research shows that 90% of workers would benefit from waiting until age 70, while only 10% wait until then. When to take Social Security is a decision based on your personal situation and health considerations. But it seems most retirees are better off, by being patient and holding off. Contact your advisor if you have questions about your Social Security benefit. CNBC

Quick Hits:

  • Why the balloon was a disaster for China: Greg Valliere
  • If you are struggling with managing your email Inbox, here are some tips: WSJ
  • Introverts have some highly desirable skills that set them apart from extroverts: CNBC
  • If you want a more affordable version of Barolo or Barbaresco, Langhe Nebbiolo may be the answer: WSJ
  • Last weekend was too crazy cold for any hiking, but here are tips for hiking safely during the winter months when you can get out there: Voyageur Tripper REI
  • Here are some healthy chocolate recipes for Valentine’s weekend: Eat This, Not That WSJ

Train Your Brain to Remember Almost Anything: Hermann Ebbinghaus pioneered the study of memory a hundred years ago. The Ebbinghaus Forgetting Curve he established stated how we retain or lose information. For example, one day after a presentation, if you’ve done nothing with the material you’ll lose between 50 and 80 percent of it from memory. By day seven it goes to ten percent and in a month it is almost all gone. But if within a day after the presentation, you review the material for ten minutes, and seven days later review it for five minutes, and review it once again for a couple of minutes after a month, you will retain almost all the information. This “spaced learning” reinforces the material and vastly reduces the rate at which you forget information. Mind Tools   Inc.

How Long Does It Take to Lose Your Fitness, Or Gain It Back? If you are taking long breaks from your exercise regime, you may be losing your gains quicker than you thought. Regular exercise helps your body deliver oxygen and nutrients to your tissues more efficiently. The first thing that declines from inactivity is your cardiovascular fitness and it starts in just a few days. Studies show that after 12 days the heart pumps less blood volume, including less oxygen delivered to muscles and cells. The biggest drop-off in cardiovascular health occurs after about three weeks. Strength declines more slowly and usually occurs after eight weeks. Your age and past fitness have an effect as well. The good news for those who were previously fit, muscle memory will help to get you fit quicker and many can regain approximately one-half of their fitness in as little as 10-14 days with moderately hard workouts. It’s important to gauge how your body feels and not overdo it – consistency is key as well as keeping the workouts moderately intense. NYT

Quote: “The world seems to be accustomed to delaying gratification less and less, which means the rewards of delaying gratification grow more and more.” James Clear

Bonus Quote for Valentine's Day? “If you want a marriage that is going to last, what quality do you look for in a spouse? You look for someone with low expectations." Warren Buffett YouTube

Thank you for reading RSWA Financial Advisor Insights! We welcome feedback and please forward this to a friend! Be well, take care, and stay safe!



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