Viewpoints: April 2026

On balance, state labor markets were fairly stable in January. Several states had statistically significant gains in payrolls, led by California’s 93,500 (.5 percent) surge. In other large states Texas was up 40,100 and Illinois 18,000-both increases of .3 percent. DC was the only significant drop; down 5,400 (.7 percent). Most other states had insignificant gains (these amounted to more than 20,000 in Florida and New York). As one might expect, most of the DC job loss was in government.

The only state to experience a statistically significant change in its unemployment rate was Florida, which saw a .2 percentage point gain. The highest unemployment rates were in DC (6.7%), California (5.4%), Delaware (5.4%), Nevada (5.3%), New Jersey (5.2%), Oregon (5.2%), Michigan (5.0%), and Washington (5.0%). Alabama, Hawaii, North Dakota, South Dakota, and Vermont had unemployment rates below 3.0%, with Hawaii and South Dakota’s the lowest, both at 2.2%.

Puerto Rico’s unemployment rate was unchanged at 5.7% and the island’s job count edged down 400.

We remain overweight Japanese equities and view the recent market correction as a buying opportunity. The macro backdrop remains constructive: business cycle indicators are firm, corporate profitability is strong, and there are no major systemic risks. Any economic slowdown is likely to be temporary and should be looked through rather than feared.

Business cycle signals reinforce this view (Figure 1). Profit and investment cycles are clearly in an upswing, while borrowing costs remain well contained. The two-year real lending rate, though rising, sits comfortably within its historical range, indicating that the cost of capital is not restrictive. Credit growth is broadly aligned with economic expansion, with signs of strengthening private sector demand. The only soft spot is money supply growth, but even here the recent acceleration reflects a rebound from low levels rather than a structural concern. Overall, the Bank of Japan (BoJ) expects real GDP growth of around 1% annually over the next three years—well above its estimated potential rate of 0.5%.