Economic Updates

ECONOMY GROWS 2.8% in Q4  While this is the best GDP reading since Q2 2010, the initial estimate from the Bureau of Economic Analysis still disappointed the markets. Many economists and investors were looking for growth of 3.0% or better. The majority of the growth actually came from increased inventories. Consumer spending rose 2.0% last [...]

NO CONSUMER INFLATION INCREASE IN DECEMBER  For the second month in a row, the Labor Department reported no advance in its Consumer Price Index. Core CPI did rise 0.1% last month. Across 2011, consumer prices rose 3.0%; last year was the most inflationary year since 2007. As for wholesale inflation, the Producer Price Index declined [...]

AN UNDERWHELMING RETAIL SALES REPORT Holiday shopping was strong … or was it? The Census Bureau’s newest monthly retail sales data indicated only a 0.1% gain for December. Yet in the big picture, 2011 was the best year for retail sales since 1999. Total retail sales rose 7.7% last year, online and catalog sales were [...]

UNEMPLOYMENT DOWN TO 8.5% In December, the jobless rate declined for the fourth straight month to its lowest level since February 2009. The Labor Department announced that the economy added 200,000 net new jobs last month, topping the consensus forecast of analysts polled by Reuters who expected a gain of 155,000. Separately, payroll processing firm [...]

THE MONTH IN BRIEF The Dow advanced 1.43% and the S&P 500 rose 0.85% in December, but there was no major “Santa Claus” rally at the end of 2011. As a result, the Dow wound up +5.53% for the year while the S&P 500 posted a 2011 loss of 0.003%. While the year was hardly [...]

STOCKS IN 2011: DJIA +5.5%, S&P 500 ENDS FLAT The Dow Jones Industrial Average bucked a global trend and advanced in 2011. The index rose 11.95% in the fourth quarter, a move that separated it from a pack of overseas benchmarks that finished the year with double-digit percentage losses. In terms of price return, the [...]

PAYROLL TAX HOLIDAY EXTENDED FOR 2 MONTHS Friday, President Obama signed an extension of the payroll tax cut lasting through February 29. The stopgap legislation also extends long-term unemployment benefits through that date and postpones a 27% reduction in Medicare payments to doctors. The federal government will pay for the extenders by having Fannie Mae [...]

JOBLESS CLAIMS FALL TO 3½-YEAR LOW Last Thursday, the Labor Department announced that 366,000 Americans filed initial jobless claims in the week ending December 10, the lowest weekly figure since March 2008. This was a drop of 19,000 from the preceding week and refuted the expectations of some economists. This may be a sign that [...]

CONSUMERS FEEL BETTER IN EARLY DECEMBER December’s initial University of Michigan consumer sentiment index is in, and the reading of 67.7 represents a six-month high. This is a 3.6% increase from the final November survey. The sub-index of consumer expectations (which some regard as an indicator of future consumer spending) improved from 55.4 to 61.1. [...]

JOBLESS RATE FALLS TO 8.6% In November, U.S. unemployment hit its lowest level since March 2009. November’s net job gain was 120,000. While the Bureau of Labor Statistics report showed that the majority of the new hires were made by retailers and temp agencies, this is still a sign of recovery. The underemployment rate fell [...]

THE MONTH IN BRIEF An astonishing rally during the last three days of November did much to improve what had been an anxious month for investors. The Dow ended up gaining 0.76% in November after jumping 4.24% on November 30 alone, responding largely to coordinated action by the world’s central banks to improve liquidity in [...]

A TINY INCREASE IN CONSUMER SPENDING Personal spending advanced by just 0.1% in October, the smallest gain in four months, as measured by the Commerce Department. Hopefully a strong Black Friday and Cyber Monday will make November a different story. In better news, personal incomes rose 0.4% last month, the best month for that statistic [...]

CONSUMER PRICES RETREAT IN OCTOBER For the first month since June, consumer inflation decreased. The biggest influence on the 0.1% decline in the Consumer Price Index? Falling retail gasoline prices. New car prices also saw their biggest one-month drop in nearly two years. Core CPI rose 0.1% in October; annualized inflation lessened to 3.5% with [...]

ACTIONS in GREECE & ITALY CALM MARKETS Global investors seemed reassured at the end of last week by developments in the European Union. By Friday, Greek prime minister George Papandreou had stepped down; Italian prime minister Silvio Berlusconi’s resignation was at hand. Greek prime minister designate Lucas Papademos and a new coalition government will now [...]

JOBLESS RATE DECREASES TO 9.0% Economists surveyed by Bloomberg News had expected unemployment to stay at 9.1% in October, so this was a nice development. Still, this latest jobs report had something in common with its predecessors: underwhelming job growth. Non-farm payrolls expanded by 80,000 positions last month, but that fell short of the 95,000 [...]

THE MONTH IN BRIEF In October 2011, stocks had their best month in nearly 20 years. The S&P 500 climbed 10.77% as optimism returned; investors were relieved that Eurozone nations were progressing toward a solution to avert a Greek default. However, the month ended with a political curveball that threatened to sabotage the whole effort. [...]

Households EARN & SAVE LESS, YET SPEND MORE On Friday, Commerce Department data showed that personal incomes have declined in each of the past three months when adjusted for inflation. However, personal spending has increased in each of those months; it improved by 0.6% in September. The personal savings rate fell by 0.5% last month [...]

RETAIL SALES JUMP MOST IN 7 MONTHS On Friday, the Commerce Department said overall U.S. retail spending improved 1.1% in September, with auto sales rising 3.6% for the month and department store sales up 1.1%. August retail sales – previously recorded as flat – were revised north to a 0.3% gain.1  UMICH SENTIMENT SURVEY SHOWS [...]

HIRING IMPROVES…WITH A FOOTNOTE Economists polled by MarketWatch had expected non-farm payrolls to increase by 59,000 for September. In a nice surprise, the economy added 103,000 jobs. However, 45,000 of those “hires” were actually striking Verizon employees returning to work. The unemployment rate remained at 9.1% for the third straight month. The Department of Labor [...]

ANNUALIZED INFLATION HITS 3.9% So noted the Bureau of Labor Statistics last week. The Consumer Price Index rose 0.3% during the month of September, with core CPI rising 0.1%, the smallest such increase in six months. (Annualized core consumer inflation was at 2.0%.) The Producer Price Index climbed 0.8% for September after a flat August.1  [...]

AMERICANS SPEND A BIT MORE, EARN A BIT LESS In August, personal spending improved by 0.2% while personal incomes retreated by 0.1%. This was the first monthly decline in household incomes since October 2009; July’s household earnings gain was revised down to 0.1%.1  An IMPROVEMENT IN CONSUMER SENTIMENT September’s final University of Michigan consumer sentiment [...]

INVESTORS SEEK CASH, WATCH POLICY MOVES Stocks tumbled last week as Wall Street shrugged off news of the Federal Reserve’s move to direct $400 billion into longer-term Treasuries and wondered if Europe’s debt troubles might trigger a recession. At mid-week, the Federal Reserve and International Monetary Fund managing director Christine LaGarde both noted “downside risks” [...]

THE MONTH IN BRIEF September 2011 was a difficult time for many investors; the best thing about it may be that it’s over. Stocks and commodities were battered during the month – the S&P 500 retreated 7.18% and the Thomson Reuters/Jefferies CRB Commodity Index sank 12.97%. Investor anxiety about the European Union’s debt problems increased, [...]

CPI, PPI TELL DIFFERENT STORIES According to the Bureau of Labor Statistics, the Consumer Price Index rose 0.4% in August – and annualized inflation came in at 3.8%, the highest rate in nearly three years. Annualized core inflation was +2.0% given a 0.2% rise in core CPI last month. On the other hand, producer prices [...]

THE MONTH IN BRIEF In August, Wall Street waited for a debt deal, reeled from Standard & Poor’s downgrade of the U.S. credit rating, contended with mounting anxieties over mediocre domestic indicators and troubles in Europe, felt an earthquake and braced itself against an oncoming hurricane. No wonder the S&P 500 slipped 5.68% during the [...]

WILL CONGRESS PASS THE $447 BILLION JOBS PLAN? Thursday, President Obama challenged Congress to swiftly approve the American Jobs Act – a plan that would cut the payroll tax for workers and businesses to 3.1% in 2012 and offer tax credits as large as $4,000 to companies hiring people out of work for more than [...]

NO JOB GAINS IN AUGUST In August, nonfarm payroll employment totaled 131.1 million – as it did in July. The Labor Department measured no job growth in the economy for the first time since September 2010. Additionally, employers reduced the average work week slightly to 34.2 hours. The unemployment rate remained at 9.1% last month.1 [...]

COULD SEPTEMBER BRING ANOTHER STIMULUS? Could we see a QE3? Maybe. While Federal Reserve Chairman Ben Bernanke made no mention of a plan to aid the economy at last week’s Fed symposium in Wyoming, he did refer to “a range of tools that could be used to provide additional monetary stimulus” and noted that the [...]

RISING GAS PRICES KEY FACTOR IN INFLATION SPIKE The federal government’s Consumer Price Index recorded a 0.5% inflation increase for July. Gasoline prices rose 4.7% during the month; food prices rose 0.4%. Core CPI advanced 0.2%. Producer prices rose as well – the Labor Department’s July Producer Price Index posted a 0.2% increase, with core [...]

Americans BUY MORE IN JULY According to the Commerce Department, U.S. retail purchases increased by 0.5% in July for the best month-over-month gain since March. That doesn’t seem to spell recession; if anything, it attests to the resilience of consumer spending. Additionally, business inventories grew by 0.3% in June as wholesale stockpiles grew 0.6%.1,2 CONSUMER [...]

PRIVATE SECTOR ADDS 150,000+ NEW JOBS America’s jobless rate ticked down to 9.1% in July as private sector payrolls expanded by a better-than-anticipated 154,000 positions, 81,000 of which were in the health care, retail and manufacturing industries. On the downside, Labor Department data showed that 156,000 people stopped looking for work last month; 6.2 million [...]

THE MONTH IN BRIEF Debt. The word hung over global markets like a cloud in July, and Wall Street braced for the shock that could have resulted if Congress didn’t raise the debt ceiling by August 2. Fortunately for stocks, a deal was struck in time – but the anxiety in the days prior to [...]

THE MONTH IN BRIEF June was looking pretty bleak … but then economic indicators turned surprisingly positive and Greece passed austerity measures that could help it avoid default. The month concluded with a powerful Wall Street rally. Still, the S&P 500 lost 1.83% for June. Most of the month’s data substantiated that we were seeing [...]

DEBT ISSUES DOMINATE THE HEADLINES Friday, President Obama reassured the media that Democrats and Republicans had “enough time” to “create a package that solves the deficit and debt.” While Congress needs to hike the debt cap by $2.4 trillion to enable federal borrowing through the end of 2012, Republican leaders want an equivalent federal spending [...]

MINIMAL JOB CREATION IN JUNE The Labor Department issued a disappointing unemployment report Friday. In June, non-farm payrolls expanded by just 18,000 jobs. (May’s net job gain was revised down from 54,000 to 25,000.) The unemployment rate was 9.2% in June; it has increased in each month since March.1 SERVICE SECTOR GROWS FOR 19th STRAIGHT [...]

SOFT SPENDING DURING THE SOFT PATCH After ten consecutive months of gains, personal spending was flat for May and actually retreated 0.1% when adjusted for inflation. Weak auto sales may have been the biggest influence. Economists polled by Reuters had projected a 0.1% gain in the indicator. The Commerce Department did note that personal incomes [...]

PEAK HOMEBUYING SEASON, BUT FEWER HOME SALES The National Association of Realtors reported a 3.8% dip in existing home sales in May, and the Census Bureau noted a 2.1% reduction in new home purchases last month. The good news? New home sales were up 13.5% from last May, with the average price of a new [...]

PRICES RISE, BUT INFLATION PRESSURE EASES According to the Bureau of Labor Statistics, the Consumer Price Index rose 0.2% in May, with core CPI up 0.3%. (Food prices rose 0.4% and energy prices rose 0.6% last month.) This is the tamest monthly increase in inflation since last November. In year-over-year terms, the CPI is up [...]

NEW BEIGE BOOK SHOWS GROWTH MODERATING At last week’s International Monetary Conference, Federal Reserve Chairman Ben Bernanke conceded that the pace of the recovery had become “frustratingly slow.” While the Fed’s latest Beige Book showed solid economic growth in eight of 12 Fed districts (with growth accelerating in the Dallas region), growth had moderated in [...]

HIRING TAPERS OFF IN MAY Wall Street braced itself Friday for a subpar jobs report, and that was what arrived. Non-farm payrolls grew by just 54,000 in May – and if McDonald’s hadn’t added 62,000 fast-food positions last month, net hiring would have been negative. Payrolls had expanded by an average of 220,000 positions a [...]