Four things remained firmly on the economic upswing this year: interest rates, inflation, the labor market’s consistent strength and the consumer’s desire to spend money. The last two, labor and spending, contributed to the stubborn persistence of the last bit of inflation, and therefore, the Federal Reserve’s reluctance to lower interest rates.
As our year ended May 31, 2024, there were signs of consumers becoming a bit more cautious in spending, and the labor market’s fever cooling, but the central bankers are still concerned about lowering rates before their 2% benchmark inflation rate is steadily evident in the prevailing economic data.
Business Alabama’s index performed well and ended easily in positive terrain. The Alabama Index posted stellar increases, moving ahead 488.4 points, or 24.19%, and closing at 2,507.51. Advancing issues overtook declining issues at a 10-to-6 count. The Comprehensive Index added 271.65 points, or 12.83%, and ended at 2,389.34. Advancing issues easily bypassed declining issues by a 39-to-16 count.
The Federal Funds rate remains high. Talk about recession, which was prevalent last year, seemed to fade away as the year went on, and the idea of the so-called “soft landing” became widespread.
A hidden aspect of inflation this year also kept prices mulishly high. It is sometimes called “greedflation,” and refers to the higher prices companies began to charge for goods during the pandemic because of supply chain snarls and other obstacles. When supply chain problems eased, prices didn’t come down. In late May, Target, and then other retailers including Amazon, Walmart and Walgreens, started lowering prices.
Despite keeping their wallets open, higher prices and inflation did take a toll on consumers’ mood. The Conference Board’s consumer confidence index whipsawed around during the year. It began in May 2023 with a reading of 102.3, jumped to a high of 114 in July and then slid gradually downward until a November reading of 102. In December, the index rose again to 108, then January 2024’s 110.9, and then slipped again after that until April’s reading of 97.5 and May’s reading of 102, ending almost where it started in 2023.
Job creation and labor market strength remained high throughout the year. Although job creation began to slow at the end of our session, it still remained remarkably robust during 2023 and 2024, with 2023 posting the highest job creation in the last decade, adding almost 2.7 million jobs. Monthly job creation totals tallied by the Labor Department consistently defied analysts’ expectations. In the reporting period for which we have figures (March 2023 through March 2024), the most shocking figure came in July 2023, when 250,000 jobs were forecast, but 528,000 jobs were actually created.
Manufacturing in the U.S. struggled to move beyond contraction, as measured by S&P Global’s Manufacturing PMI. In that index, where figures below 50 indicate contraction and above 50 expansion, manufacturing began with a low reading of 46.3 in June 2023, stayed below 50 until October, and then fell again in November and December 2023. The reading reached 50.7 in January and has remained above 50 through the May 2024 reading of 51.3.
The other economic arena showing signs of struggle was the beleaguered housing sector, waiting for interest rate cuts that never came. Housing also sagged from the lack of availability. Many homeowners who refinanced their mortgages during the pandemic years were leery of venturing into the fray when mortgage rates were so much higher this year and last. While existing home sales jumped to 6.12 million homes in 2021, in 2022, sales of previously owned homes dropped to 5.03 million homes sold, to 4.09 million in all of 2023. In 2024, the figure is forecast at 4.62 million.
The National Association of Builders/Wells Fargo builder sentiment index also measured the fluctuations in the housing market during this time. From a reading of 50 in May 2023, sentiment rose and then soured to 34 in November. It rose again gradually, hitting 51 in both March and April, before falling again to 45 in May 2024.
“A lack of progress on reducing inflation pushed long-term interest rates higher in the first quarter and this is acting as a drag on builder sentiment,” said NAHB Chief Economist Robert Dietz. “The last leg in the inflation fight is to reduce shelter inflation, and this can only occur if builders are able to construct more attainable, affordable housing.”
Dietz’s voice echoed in others’ assessments about the economy and interest rates. As our year recap closed in May 2024, Brian Jacobsen, chief economist at Annex Wealth Management, said: “The pickle for the Fed is whether growth will slow faster than inflation. The road to lower inflation has been like a joyride so far, but the last mile will be more challenging.”
Alabama stocks mirrored the upswing in the larger markets, too, but one of our top contenders took a larger bite. Vulcan Materials, the largest company in the local pantheon measured in market capitalization for the years 2021-2023, again bared its teeth as the top dollar gainer in the Alabama Index, leaping 60.27 points, or 30.83%. For 2023, VMC posted annual revenues of $7.78 billion, compared to $7.32 billion in the year before. Earnings came in at $933.2 million, or $7.02 per share, versus earnings of $575.6 million, or $4.33 in 2022. Vulcan closed out May 2024 with a share price of 255.77.
Hibbett Sports, a venerable company in Alabama and an OG member of the Alabama Index, made waves and boosted its share price by 50.56 points, or 140.37%. As announced in these pages in April 2024, the company will be acquired by UK retailer JD Sports Fashion. The $1.1 billion deal is expected to close in the latter part of 2024. HIBB began its life in 1945 as Dixie Supply Co., and renamed Hibbett & Sons in 1952 after its founder, Rufus Hibbett. The name was changed to Hibbett Sporting Goods in 1969. As May ended, Hibbett Sports closed at 86.58 and was the top percentage gainer in Alabama stocks this year. To see a graph of Hibbett annual share prices over the years, please see the sidebar at left.
TruBridge, which re-branded from Computer Programs & Systems in March, 2024, fell 14.45 points, or 60.56%, after swinging to a loss from the year before. For 2023, TruBridge reported a loss of $45.8 million, or $3.15 per basic share, compared to earnings of $18.9 million, or $1.08 per basic share. Revenue for this year was $339.4 million, versus $326.6 million in 2022. TruBridge ended at 9.41 and was the top dollar and percentage loser in Alabama stocks.
Margot Crabtree covers stocks for Business Alabama, under contract with her company, Trade Trends.
This article appears in the August 2024 issue of Business Alabama.
