There’s an old Wall Street saying that often resurfaces this time of year: “As goes January, so goes the year.” The idea comes from the January Barometer, created in 1972, which has correctly signaled the market’s annual direction about 84% of the time. Interestingly, 2025 followed the spirit of that rule. The S&P 500 rose 2.7% in January, then slid through three straight months of declines before staging an impressive comeback, finishing the year up more than 16%. It’s a good reminder that early signals can matter but the road is rarely smooth.
The U.S. labor market ended 2025 on a softer note, with December payrolls rising just 50,000, well below expectations, and prior months were revised lower. For the full year, job growth averaged roughly 49,000 per month, a sharp slowdown from 2024. At the same time, the unemployment rate dipped to 4.4% and broader measures of underemployment improved. In short, hiring has cooled, but layoffs remain low and employment levels are holding up. Wage growth also stayed firm, with average hourly earnings up 3.8% year over year, which should keep the Federal Reserve cautious as they weigh future rate decisions.
Additional labor data reinforced the picture of a “low-hire, low-fire” economy. Job openings fell in November, to the lowest level in more than a year, and hiring rates slipped to near decade lows. Most industries saw fewer openings, though layoffs declined and voluntary quits ticked higher. Private-sector data showed modest December gains led by health care, education, and leisure and hospitality, pointing to a labor market where higher-income consumers continue to drive spending. I believe this trend has been “locked in” now for some time and don’t see this changing much in 2026.
On the global front, trade data offered a brighter surprise. The U.S. trade deficit narrowed sharply in October to its lowest level since 2009 as exports rose and imports declined following the rollout of new tariffs earlier this year. While the year-to-date deficit remains higher than last year, the recent trend is helping support growth. Productivity gains have also been impressive, jumping nearly 5% in the third quarter and pushing labor costs lower, allowing the economy to grow without adding inflation pressure, even as hiring remains subdued. The markets have been very receptive to these data points in the early days of 2026.
Interesting to Note
January and February consistently rank as the months when people set the most ambitious goals—and also when flexibility matters most. Adjusting the plan is often part of sticking with it.
Looking Ahead
- Fed Watch: With job growth slowing but wages and overall growth still firm, markets expect the Fed to remain on hold for now, with the next potential rate cut not likely until mid-year.
- Labor Market Signals: Upcoming jobs and hiring data will be key in determining whether this slowdown stabilizes or deepens.
Despite the recent softening in jobs data, many investors continue to see a supportive backdrop for equities in 2026. Fiscal stimulus from the One Big Beautiful Bill Act, the prospect of lower interest rates under a more dovish incoming Federal Reserve chair, and the continued rollout of artificial intelligence into the real economy remain key pillars supporting a constructive market outlook. The path may be uneven, but the longer-term foundation still looks solid.
Have a nice weekend!
https://en.wikipedia.org/wiki/January_barometer
https://www.cnbc.com/2026/01/02/how-january-goes-could-set-the-markets-tone-for-the-rest-of-2026.html
https://www.wsj.com/politics/policy/democrat-government-shutdown-funding-bill-deadline-777ad7a2?mod=economy_lead_story
https://www.cnbc.com/2026/01/08/trade-deficit-in-october-hits-smallest-since-2009-after-trumps-tariff-moves.html
https://www.cnn.com/2026/01/07/economy/us-jolts-job-openings-layoffs-november
https://www.cnbc.com/2026/01/09/jobs-report-december-2025.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail
Christopher E. Wasson, CFP®
President
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
MosaicAssetPartners.com
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