Gross domestic product increased at an annualized rate of 3.2% in 2023’s fourth quarter, according to the second estimate released by the Commerce Department’s Bureau of Economic Analysis. The slight downward revision from the first estimate of 3.3% reflected a more accurate view of private inventory investment.

Total nonfarm payroll employment in the U.S. grew by 275,000 jobs in February. Even so, the unemployment rate ticked up to 3.9% because there were also 334,000 more unemployed people. The labor participation rates remained steady at 62.5%.

Initial jobless claims remained steady at 217,000, seasonally adjusted, in the week ending March 2. The four-week moving average, which removes volatility, decreased by 750 to 212,250.

The Consumer Price Index for All Urban Consumers rose 0.4% in February on a seasonally adjusted basis after increasing 0.3% in January, according to the Labor Department. Over the last 12 months, the all-items index increased 3.2% before seasonal adjustment, compared to 3.1% in the preceding month. Core inflation, excluding food and energy, rose 0.4% for the month and 3.8% for the year. Gasoline, shelter and airline ticket prices drove the index higher. The good news is that grocery prices stabilized.

The Commerce Department’s latest reading of the Personal Consumption Expenditures index – the Federal Reserve’s preferred inflation metric – showed a 0.3% monthly price increase and a 2.4% year-over-year price increase. The cost of services is driving the PCE upward as the cost of goods is actually declining.

The Conference Board’s Consumer Confidence Index reversed course, dipping in February to 106.7 from a revised 110.9 in the previous month.  The data now suggest that there was not, as previously indicated, a material breakout to the upside in confidence at the start of 2024.

The S&P 500 gained a prodigious +5.3% on a total-return basis in January. The CBOE VIX “fear gauge” ended the month at 13.40, down 6.4%, suggesting that confidence among investors is improving proportionally.

The 10-year Treasury note ended January with a 4.252% yield, having started the month at 3.965%.

European stock indexes were mostly higher. For January, Frankfurt’s DAX and Amsterdam’s Euronext 100 rose +4.6% and +2.4% respectively. Meantime, London’s FTSE 100 was flat.

Asian markets surged. Tokyo’s burgeoning Nikkei 225 gained +7.9% while Shanghai’s SSE Composite and Hong Kong’s Hang Seng improved +8.1 % and +6.6% respectively.

Central banks throughout the world’s advanced economies have been sending mixed messages about their intentions, and that has caused confusion in bond markets around the globe.

“Against a benign backdrop of declining inflation and surprisingly resilient economic activity, market participants' expectations initially drifted away from central bankers' projections, so they started pricing in early rate cuts,” according to the Bank for International Settlements, the Switzerland-based central bank of central banks. “But then central bank officials repeatedly intervened to dispel excessive optimism, reaffirming that the fight to bring inflation back to target could not be declared won yet. Their efforts to herd market expectations back in line with their projections succeeded and narrowed the daylight between markets' and central banks' expectations.”

This has led to volatility in the fixed income space, with yields dropping at the end of 2023 then whipsawing back up in the first two months of 2024.

According to the CME Fed Watch Tool, Wall Street traders surveyed are almost unanimous in their expectation that the Federal Reserve will stand pat at its next meeting, set for March 20.

West Texas Intermediate crude prices gained another +3.2% to end February at $78.26 per barrel.

Gold dipped -0.6% to end February at $2,054.70 per ounce.

The dollar gaining +2.1% in Tokyo, +0.5% in London, +0.1% in Frankfurt

Bellwether cryptocurrency bitcoin gained +45.8% -- you read that right -- in February, ending at $62,016.

Flights canceled for 67-year-old pilots

A year after it was first proposed, the Let Experienced Pilots Fly Act died quietly in committee. As we reported here, it “passed its first hurdle when the bill … cleared the House Transportation and Infrastructure Committee in June. The LEPF Act was filed as an amendment to the Federal Aviation Administration Reauthorization Act, which sailed through and is likely to pass the full House of Representatives with little debate.”

The House passed the FAA reauthorization and then the Senate passed a related bill but, as we predicted, the upper chamber took a hard look at the provision that would have raised the airline pilot retirement from 65 to 67. On February 8, the Democrat-majority Senate ultimately stripped the LEPF Act language out of the larger bill on a party-line vote before promoting it from the Commerce, Science, and Transportation Committee to an upcoming floor vote, yet to be scheduled. After three deadline extensions, Congress now has until May 10 to reconcile the House of Representatives version with the Senate version and send it to President Joe Biden to sign into law.

That means there is still a glimmer of hope for aging pilots looking to stay aloft for two more years. The reconciled bill could bring this provision back to life, although that’s far from certain.

The split

On Capitol Hill, this is very much a partisan issue but, on the flight deck, it’s more of a generational one. It may have been the Republican-controlled House that passed the provision and the Democratic-controlled Senate that purged it, but it’s mostly older pilots who are in favor of it and younger pilots who oppose it.

As we noted in June 2023, the Association of Mature American Citizens advocated for the LEPF Act with the Air Line Pilots Association union strongly against. We listed the points that each side made but confessed a slightly skeptical view of ALPA’s position.

In Washington, though, nothing is agreed to until everything is agreed to. Until then, it’s a waiting game.

The rest of the bill

In all this discussion of the retirement age, it’s important to look at the broader bill, which has met with far less controversy. The legislation would also:

• Fund the FAA through 2028,
• Take several measures to improve aviation safety,
• Increase the number of air traffic controllers,
• Provide flight attendants with self-defense courses,
• Offer pilots mental health services,
• Improve airline consumer protection,
• Enhance aircraft accessibility,
• Ensure air travel access in rural areas and
• Upgrade airport technology,

What might have older pilots fuming, though, is that the legislation identifies the shortage of pilots as a problem to be solved … some other way. The Senate bill:

• Sets aside money for recruiting and training new pilots,
• Boosts student loan limits for pilot training and
• Provides grants for recently discharged military veterans to become commercial pilots – especially if they’re not already aviators.

And yet retaining experienced, healthy pilots for another two years is somehow beyond the pale.

At the close

While prospects are dim for the measure passing now – or indeed before 2028 – it’s not completely dead, and it’s sure to come up again four years from now when this FAA authorization sunsets.

What you do with this information depends, among other things, on where you are in your aviation career. For now, consider consulting your experienced financial professional to optimize your plans regardless of the outcome.

-David

David Camarillo, CFP®, ChFC, CFS

Director of Advisory Services

David is a proud Trinity University alum, where he earned his Bachelor of Arts in English and History. He started his career in the financial services industry in 2005 at Wells Fargo, and in 2007 he joined H.D. Vest Financial Services where he consulted for the company’s top financial advisors. He held a Series 7 and 66 until 2018, and he still holds life and health insurance agent and variable insurance products agent. He obtained the Certified Financial Planner™ (CFP) designation in 2011, the Chartered Financial Consultant (ChFC) designation in 2014, and holds the Certified Funds Specialist (CFS) designation. David has been a Wealth Advisor with Smith Anglin since 2014, and in 2019 he was promoted to Director of Advisory Services.

Outside the office David stays active with his wife, Mayra, and two kids, David Jr. and Amelia. David is an avid runner, racing everything from the 5k to the marathon. He enjoys hiking nature trails with his family and their dog, Bo, and playing guitar loudly when possible. He also volunteers with Back on My Feet and the North Texas Food Bank.