Market Note: Productivity, Spending, and Value: Signals Beneath the Surface

By Hightower Great Lakes on January 12, 2026

Labor Market Health

The labor market continues to adjust in a healthy and constructive way, reinforcing the broader soft-landing narrative. Third-quarter productivity rose 4.9% year over year, while unit labor costs declined 1.9%[1], a powerful combination that points to above-trend growth without corresponding labor cost inflation.

This dynamic is particularly supportive for the inflation outlook, as rising productivity allows economic growth to continue without putting upward pressure on prices.

Much of the market attention remains fixed on monthly nonfarm payrolls, which delivered a modestly positive reading last week, showing that the unemployment rate edged lower from 4.5% to 4.4%.[2]

Weekly jobless claims remain exceptionally well behaved at 208,000[3], a level historically consistent with a healthy labor market. In addition, the latest Job Opening and Labor Turnover Survey (JOLTS) report showed rising quit rates, signaling growing worker confidence in job availability.

Strength in the Consumer

The U.S. consumer continues to show resilience, supported by firm spending trends and a strong high-income cohort. Credit card data from JPMorgan Chase shows that on a two-year stacked basis, consumer spending in the November–December period is running at approximately 8.3%, with December accelerating to 10.2%.

These figures suggest underlying demand remains healthy as the year closed. Supporting this trend, Visa reported U.S. apparel spending at its strongest level since the fourth quarter of 2021, indicating improved discretionary activity rather than a retrenchment.[4]

Higher-income households, which are driving the majority of spending, have seen an estimated $60 trillion in net worth creation since 2019. When aggregated, these trends are reflected in the Atlanta Fed GDPNow tracker, currently running near 5.4%, reinforcing a constructive backdrop for earnings as the reporting season begins.

Tailwinds for Value

Despite the strong year-to-date performance across several sectors, we continue to see compelling value in more traditional areas of the market, particularly financials. While bank stocks often trade poorly around earnings and expectations are elevated heading into the upcoming reporting season, periodic weakness should be viewed as an opportunity rather than a signal of deteriorating fundamentals.

Valuations remain reasonable, with the big six U.S. banks trading 14-15 times earnings, while leading investment banks such as Morgan Stanley and Goldman Sachs trade closer to 17–18 times. Even after a strong run, these multiples remain attractive relative to the improving operating backdrop.

Importantly, the investment case for financials extends well beyond capital markets and M&A activity. The ongoing shift toward deregulation has yet to fully inflect in earnings and capital returns, suggesting further upside as excess capital is increasingly returned to shareholders through buybacks and dividends.

In parallel, select cyclical sectors continue to present value. Industrials remain well positioned, and energy is becoming incrementally more attractive as global growth improves and commodity prices firm. Broadly, improving growth dynamics and rising commodity prices, including copper, gold, and platinum, support a constructive outlook for these traditional value segments into 2026.

Fixed Income

U.S. Treasuries yields were mixed, with the curve flattening after the December payrolls report, and unemployment rate came in below expectations. By Friday’s close, the front end of the curve finished higher, with the 2-year yield rising 6 basis points, while longer maturities moved lower, with the 10-year and 30-year yields declining 2 and 5 basis points, respectively.

Credit markets saw continued strength last week. Investment-grade spreads tightened 2 basis points to + 107, while high-yield spreads narrowed 11 basis points to +321. In the municipal market, tax-exempt yields moved lower across the curve, with declines ranging from 4 to 14 basis points[5].

Subscribe to CNBC Pro for Stephanie Link’s latest market views, insights, and investment ideas.

Return for Selected Indices[6]

Click here to read last week’s Market Note (12/22).

Disclosures

Investment Solutions is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is neither indicative nor a guarantee of future results. The investment opportunities referenced herein may not be suitable for all investors.

All data or other information referenced herein is from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other data or information contained in this presentation is provided as general market commentary and does not constitute investment advice. Investment Solutions and Hightower Advisors, LLC or any of its affiliates make no representations or warranties express or implied as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information. Investment Solutions and Hightower Advisors, LLC assume no liability for any action made or taken in reliance on or relating in any way to this information. The information is provided as of the date referenced in the document. Such data and other information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed herein are solely those of the author(s) and do not represent those of Hightower Advisors, LLC, or any of its affiliates.

---

[1] Bloomberg: As of January 8, 2026

[2] Bloomberg: As of January 9, 2026

[3] Bloomberg: As of January 8, 2026

[4] Visa: As of December 23, 2025

[5] Bloomberg: As of January 11, 2025

[6] Source: Bloomberg. As of January 11, 2026.