In the world of markets and the economy, it’s easy for pessimistic sentiment to bombard investors:  

• Will inflation and oil prices ever go down? 
• Are we experiencing labor market tightness?  
• Will the government deficit put strain on the economy in the next recessionary period? 

On the contrary, as our Investment Management Team looks back on the previous month, they address a range of performance indicators and the reasons those indicators create objective-driven optimism among our team. 

Here are seven things for investors to know about current market and economic data.  

1. How is the Equity Market Performing?

A few months ago, the market narrative was relatively negative, impacted by the geopolitical tensions with Iran and expectations for a sinking labor market. Now the conversation has flipped (a great reminder not to time the market).  

Year-to-date through the end of May, the S&P Small-Cap Index is up over 15.5%. The S&P 500 is performing too (up about 11% through the end of May), but not as well as the S&P Small-Cap Index and S&P Mid-Cap Index.  

Why are mid- and small-cap stocks doing so well amid geopolitical volatility?  

Companies in the small- and mid-cap sectors derive a vast majority of their revenue from U.S. sources and are less impacted by global infrastructure and the current geopolitical tensions.  

To take advantage of current performance, it’s essential for investors to stay diversified and take a long-term view of the markets.  

To anticipate if market gains will continue through the end of the year, we can look at the probability of a sustained earnings backdrop. The labor market is one driver of these earnings.  

2. Is the Labor Market Tightening?

Sentiment drives more returns than actual results across capital markets, so it’s helpful to have a pulse on how people view the labor market and job opportunities.  

One way we can assess labor market sentiment is by looking at data from the Consumer Conference Board, which surveys people to determine if they believe jobs to be plentiful or hard to come by.  

The rate of change in the number of people saying jobs are hard to get is healthy compared to previous cycles. While trending upwards (unsurprising as it flows through its regular cycle), it isn’t doing so at an alarming pace.  

Nonfarm Payrolls data provides another telling snapshot of the labor market. Since the beginning of the year, the economy has created an average of 100,000 new jobs per month. This indicates that, while the economy is not creating jobs as exuberantly as it did during COVID, it is still creating jobs. 

All of this leads to the conclusion that the labor market is neutralizing (as we anticipated in our View of 2026), but it’s not cracking or derailing, as many people predicted at the start of the year.  

We can’t time shifts within the normal business cycle of the labor market, but we can consider other data points to help us track the health of businesses and the economy.  

3. Are Businesses Still Healthy?

Credit expansion in the economy — which shows that businesses are borrowing and spending — can tell us a lot about the future of the economy, earnings expectations, and portfolio returns.  

Small businesses (<500 employees) are a better indicator of the state of business borrowing and credit conditions than big companies, which are always making moves.  

The National Federation of Independent Businesses tracks credit conditions. Zero is a baseline representing the healthiest possible borrowing conditions, and anything below that indicates that businesses are having some kind of challenge with borrowing (and thus with growing, hiring, earning, etc.)  

Right now, the index is at –3.0, an exuberant number relative to past levels. This encouraging credit state has favorable implications for future economic and market conditions and confirms that the labor market cracks expected at the beginning of the year have not materialized.  

4. How Did Companies Perform in Q1?

Another optimistic metric is Q1 earnings. Companies had significantly better earnings than anticipated last quarter. The S&P 500 earnings growth rate was around 12.7%, about 10% higher than analysts expected.  

If the labor market remains in relatively good standing and consumers keep spending, companies will likely continue to perform well. 

5. What’s the State of Debt?

Government deficit data increased in May. However, separate from political discussions about government spending, our Investment Management Team focuses on household debt, which impacts the consumer’s ability to navigate economic downturns.  

The historical data shows that household debt trended up into a recession — peaking during the 2008 Great Financial Crisis — and is now trending down. 

Therefore, whenever the next recession occurs (and recessionary periods are part of a normal, healthy economic cycle), households will enter it in better financial standing than they did in 2008. Therefore, it’s unlikely the next recession will be as deep as the Great Financial Crisis. Instead, there’s a high probability the consumer and the economy will be better off, an encouraging expectation.  

6. What’s Fueling Inflation?

Economic data discussions have to touch on inflation. Recently, headline CPI came in at a 3.8% year-over-year increase versus core CPI data, which was 2.8%. Core CPI is the same as headline CPI, minus energy and food costs.  

When shaping monetary policy, the Fed focuses on core CPI, aiming to move it closer to 2% over time. Long-term inflation expectations have held steady, and five years from now, the markets and investors anticipate inflation will be under 2.5%.  

The current 1% spread between core and headline data is significant, but the vast majority of it is due to oil price increases fueled by geopolitical tensions.  

Therefore, when those geopolitical tensions ease, oil prices are likely to drop and eventually return to previous levels, bringing headline CPI with them. 

7. When Will Oil Prices Come Back Down?

Upon studying crude oil production in Saudi Arabia, Iran, and Iraq, the data seems to indicate that production may have bottomed out already, a positive signal for oil prices. In addition, every time there is a potential announcement of a truce in Iran, oil prices respond.  

Clearly reactive to geopolitical changes, oil prices are likely to drop quickly upon resolution of tensions, a hopeful indicator for those concerned about energy prices. 

Have questions about how economic and market data impacts your plan and portfolio? Reach out to a member of our team using the form below.  

Want to read more like this? Check out: “Will Technology Stocks Recover? | April 2026 Market Recap” 

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