Click here to download the Q4 ‘23 MoneyMatters Resilient Outlook brochure.

The third quarter of 2023 saw largely muted market returns with the S&P 500 slightly down. While the broad index has performed well for the year, mainly driven by the largest tech stocks, several asset classes have lagged behind such as core bonds, value, and dividend stocks.

The economy has remained resilient—surpassing analysts’ expectations—and added 336,000 jobs in September (Source: Bureau of Labor Statistics), twice as many as some economists forecast. Leisure and hospitality led the way with 96,000 jobs followed by government (73,000), partly reflecting the return of teachers, and healthcare (41,000). The unemployment rate was unchanged at 3.8% for the second month in a row, above its pre-pandemic February 2020 rate of 3.5% (Source: Morningstar). This is an indication that the market is continuing to recover from the massive COVID-related job losses.

GDP estimates continued to increase over the last several months as economic data have generally come in stronger than anticipated. In the third quarter, US GDP grew at an annualized rate of 4.9% (Source: US Department of Commerce).

The three-month moving average shows job growth of 2.1% annualized in the past three months, an uptick compared to the 1.6% growth in the prior three months, though not a dramatic one (Source: Morningstar).

We believe that while bright spots certainly exist, there are signs of bubbling headwinds. The steady rise in oil prices and interest rates (the Federal Funds rate increased by 1% from 4.33% to 5.33% in 2023 and increased from 0% to over 5% from the start of 2022), coupled with sticky inflation has continued to squeeze consumers as largely evidenced by the three recent strikes by Kaiser, the Writers Guild of America, and United Auto Workers – where wage increases and the reinstatement of cost-of-living-adjustments were and are still being negotiated. Moreover, federal student loan payments will resume after a three-year reprieve for about 12% of the US population (over 43 million Americans) who hold a collective $1.7 trillion in debt (Source: The Guardian).

The economy is showing some resilience, and stocks continue to recover from their October 2022 lows. As the financial markets and consumers’ pocketbooks find their equilibrium, we believe the likelihood of a recession in 2023 has dimmed, barring a significant world event.

Market Recap
Stock Market

For the quarter, the S&P 500 Index was down 3.27%, the Russell 2000 Small-Cap Index was down 5.13%, US 10-year treasury bonds were down 5.17%, and international stocks were down 4.11%.* However, for the year, both the S&P 500 and Russell 2000 were up 13.07% and 2.54% respectively, and September historically is a lower-performing month compared to other months of the year (Source: Morningstar).

*The MSCI EAFE Index is an equity index that captures large- and mid-cap representation across 21 Developed Markets and countries around the world, excluding the US and Canada.

The Economy

Interest rates, as measured by the US 10-year treasury notes, peaked at 15.84% in 1981 and steadily declined for a multi-decade period to nearly 0% in 2020. This was a tailwind for fixed-income investors during the period as falling rates increased bond prices. The Federal Reserve, in its continuing effort to help bring down inflation, has quickly increased interest rates leading to the 10-year yields reaching 4.57% at the end of the third quarter. This rapid rise has had the opposite effect on fixed-income investors with bond prices falling for 2021, 2022, and so far in 2023.

The good news is that investors are now being compensated with much higher coupon payments from their bond investments. Money market accounts, certificates of deposit (CDs), treasury bills, and other short-term bond investments have also performed well on a comparative basis with positive returns for the year (Source: JPMorgan).


Oil prices have surged back higher, ending September at over $90 per barrel, causing gas prices to move higher across the country (Source: JPMorgan). Higher oil prices typically lead to higher manufacturing and transportation costs, and increased inflation, which may encourage the Federal Reserve to keep interest rates higher for a longer period. The US economy, though, has shown resilience to significantly higher oil prices in prior periods while continuing positive economic growth.

Did You Know? The US is currently the world’s largest oil producer (followed by Saudi Arabia) and a net exporter.


The percentage of consumers with a monthly car payment of $1,000 or more has increased from 4.3% in the second quarter of 2019 to 17.5% in the third quarter of 2023. Further, the average amount financed has increased from $32,824 to $40,149 with the typical consumer paying $736 per month with a 7.4% loan APR (Source: Edmunds). This trend is consistent with consumers continuing to take on more debt.


US single-family properties have managed to increase in value while multi-family property values have significantly declined since interest rates began to rise in March 2022. This hint of overvaluation is something to watch as many home buyers’ budgets are stretched. The monthly cost of a new mortgage is now 42% of the US median household income, 10% higher than on the eve of the 2008 housing crash (Source: Wall Street Journal).

While a housing bubble is seemingly not imminent, housing prices may stabilize or pull back over the coming months. However, the lack of housing supply is a structural issue that will, ideally, keep prices from dipping too low.


Seniors are a major reason consumer spending has proven so resilient as the Federal Reserve has sharply raised interest rates. In August, 17.7% of the population was 65 or older and accounted for 22% of spending last year. This is the highest share since records began in 1972 and is up from 15% in 2010 (Source: Wall Street Journal). Less susceptible to debt accumulation, older consumers will provide a consumption base when job growth slows, interest rates rise, and student-debt loan repayments begin.


The economy has continued to defy market expectations, yet there are clear signs the consumer is experiencing a heavier burden financially. We believe it is possible that we will experience more market turbulence in the coming months, and therefore it is important to always proceed with caution and make decisions with emotional restraint.

Consider these four suggestions:

  1. Invest with a long-term view.
  2. Stay diversified and ensure your asset allocation can withstand a market correction.
  3. Avoid high-interest-rate debt and unnecessary risk.
  4. Review your personal goals and tune out the short-term market noise.


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As always, we are grateful for your continued trust in Roehl & Yi, and we ask that your first phone call be to us if you have any questions or concerns about your investments. May you and your family experience happiness and good health.

This client newsletter is provided for informational purposes only. Nothing herein should be construed as the provision of personalized investment advice, nor should it be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change without prior notice. Third-party data sources contained herein are for illustrative purposes only and are believed to be reliable, but we take no responsibility as to their accuracy. The newsletter contains certain forward-looking statements that indicate future possibilities. Due to known and unknown risks, other uncertainties, and factors, actual results may differ materially. As such, there is no guarantee that any views and opinions expressed herein will come to pass. Investing involves risk of loss including loss of principal. Past investment performance is not a guarantee or predictor of future investment performance. Any reference to the performance of securities of markets, indexes or specific investments is for illustrative purposes only and does not represent any of R&Y’s recommendations or performance. Any reference to a market index is included for illustrative purposes only as it is not possible to directly invest in an index. The figures for each index reflect the reinvestment of dividends, as applicable, but do not reflect the deduction of any fees or expenses, or the deduction of an investment management fee, the incurrence of which would reduce returns. It should not be assumed that your account performance or the volatility of any securities held in your account will correspond directly to any comparative benchmark index.

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