This Week Could Show How the Fed Is Impacting the Job Market

To view this email as a web page, click here.

What's Happening Today

This week will be an important one for jobs data, which could have implications for inflation and the overall health of the economy. On Friday the Labor Department will release its September jobs report, which economists expect to show unemployment remaining unchanged at 3.7%. Tomorrow, we'll also get the latest job openings and labor turnover survey (JOLTS), which will show how many workers are quitting their jobs, and how many employers are still looking for workers.

With the risk of a recession rising, everyone will be paying close attention to the labor market for any cracks. While a strong job market has been good for workers seeking wage increases and job security this year, the Federal Reserve sees it as contributing to inflation. But if the Fed moves too aggressively, we could be in for a recession.

If unemployment starts to tick higher, or the number of job openings sharply declines, it will mean that the Federal Reserve's rate hikes (which should slow down the economy) are having an impact. While unemployment is not the only factor used to determine whether we are in a recession, it is an important piece of the puzzle, so increasing unemployment numbers would be a sign that we are headed to a recession (if we aren't in one already).

After September lived up to its reputation for being a poor month for investors, closing out the month and third quarter of this year with losses, stocks are rising to kick off October ahead of the big jobs numbers.

And just a reminder for all of you with student loans: The application for student loan forgiveness should be available any day now, so it might be a good idea to prepare to fill out yours as soon as you can. Don't know how? Check out our guide here.

- Kristin

Editors' Picks

'The Fed is Breaking Things' – Here's What has Wall Street on Edge as Risks Rise Around the World (CNBC)

That Covid Goods Boom is Going Bust, Bloomberg Trade Tracker Shows (Bloomberg)

For Corporate America, Strong U.S. Dollar Cuts Both Ways (The Wall Street Journal)

How a Strong US Dollar Affects Your Wallet (The Balance)

How To Invest During a Recession (The Balance)

20 Ways to Take Control of Your Finances (The Balance)

Should I Pay Down My Mortgage Faster? (The Balance)

Latinos Are a Growing Force in Homebuying (The Balance)

Term of the Day

Custodial Roth IRA

A custodial Roth IRA is a tax-advantaged retirement account for minors that allows them to invest income they earn and reap the benefits of compounded growth for years to come. Custodial Roth IRAs are managed by a designated custodian (usually a parent) until the account owner turns 18 years old (or 21 years in some states).

An attractive feature of custodial Roth IRAs is that like a Roth IRA, the account is funded by after-tax dollars, which means the owner can withdraw 100% of funds they deposit at any time without penalty. When you take the money out, any earnings on your contributions made are not taxed, if they meet certain criteria.

The same contribution limits that apply to regular Roth IRAs apply to custodial Roth IRAs: a maximum of $6,000 per year for the 2022 tax year, or up to the amount of the child's earned income for the year, whichever is less.

Off the Charts

The number of Hispanic homeowners, especially those under 65, has grown rapidly in recent decades and is expected to continue to soar over the next 20 years, according to a report from the Urban Institute, a think tank focused on upward mobility and social equity. In 1990, just 7.3% of households under 65 were Hispanic. By 2040, that number is projected to exceed 20%.