Seasonality and the Midterm Election Effect
Seasonality has long played a role in understanding market behavior, and historical trends can help inform portfolio strategy. January has often set the tone for the year ahead. Historically, a positive January has skewed returns higher over the subsequent quarter, half-year, and full year, while a negative January has tended to precede weaker performance. With the first part of January 2026 already complete, markets have gotten off to a respectable start. While this is no guarantee of future performance, history suggests it is a constructive signal. Another important factor this year is the midterm election cycle. Markets have often underperformed in January and February during midterm election years, driven largely by political uncertainty. Typically, there is an initial lift early in the year, followed by volatility as investors grapple with unknown policy outcomes. Monitoring how markets respond during this period will be critical in assessing how these early dynamics may influence the rest of 2026.
Productivity as the Engine of Growth
Recent economic data has provided a clearer picture of the economy’s underlying strength, particularly in the labor market and productivity trends. Employment growth has moderated after a prolonged period of strength, raising questions about whether the economy can continue to grow without a hot labor market. Gross domestic products are driven by two primary forces: how many people are working and how productive those workers are. While recent job gains, approximately 50,000 new jobs, reflect modest growth, wage data has been encouraging, with wages rising 3.8% year over year. The most notable development has been a sharp increase in productivity. Third-quarter productivity growth surged to an annualized rate of 4.9%, a significant and unexpected jump. This matters because productivity allows the economy to grow without fueling inflation. When productivity rises faster than wages, both labor and capital can benefit simultaneously. With wages up 3.8% and productivity up 4.9%, there is an implied expansion in profit margins, creating growth without upward pressure on prices. This dynamic represents an ideal balance, economic expansion that rewards workers while maintaining pricing stability. Upcoming inflation data, including CPI and PPI, will be closely watched to see whether this productivity-driven growth continues to flow through the broader economy.
Greg Powell, CIMA®
President and CEO
Wealth Consultant
Email Greg Powell here
Bobby Norman, CFP®, AIF®, CEPA®
Managing Director
Wealth Consultant
Email Bobby Norman here
Trey Booth, CFA®, AIF®
Chief Investment Officer
Wealth Consultant
Email Trey Booth here
Ty Miller, AIF®
Vice President
Wealth Consultant
Email Ty Miller here
Fi Plan Partners is an independent investment firm in Birmingham, AL, with a team of professionals serving clients across the nation through financial planning, wealth management and business consulting. The team at Fi Plan Partners creates strategies in the best interest of their clients using fee based investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
No strategy can ensure success or protect against a loss.
Stock investing involves risk including potential loss of principal.
Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.
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