Economic Update

MIXED NEWS ON HOME SALES New home buying increased 2.0% in February, with all of the gain attributable to a remarkable 38.5% jump in sales in the West (a region which had witnessed a 32.7% January plunge in new home purchases). In contrast to this Census Bureau data, the National Association of Realtors noted a 7.1% February decline in existing home sales, with tightening inventory a factor. Last month, the median sale price of a new home was $301,400, up 2.6% in a year; the median existing home sale price was $210,800, up 4.4% from 12 months ago.1   THE

Weekly Market Commentary 3-28-2016

Weekly Market Commentary March 28, 2016 The Markets Are corporations in the United States struggling? In its cover article last week, The Economist (a British publication), suggested there is not enough competition among American companies. It pointed out: “Aggregate domestic profits are at near-record levels relative to GDP… High profits might be a sign of brilliant innovations or wise long-term investments were it not for the fact that they are also suspiciously persistent. A very profitable American firm has an 80 percent chance of being that way 10 years later. In the 1990s the odds were only about 50 percent.”

Weekly Market Commentary 3-21-2016

The Markets There is ongoing debate about whether markets behave in rational ways. The efficient market hypothesis suggests it’s impossible to outperform the stock market because current share prices reflect all relevant information. In other words, stocks should always trade at fair value and it should be impossible to invest in a stock that is overpriced or underpriced. The Economist reported there are two issues efficient market theorists have trouble explaining. The first is market bubbles, “where entire markets get out of whack with traditional valuation measures and then collapse.” The other is pricing anomalies. For instance, value stocks are

FEDERAL RESERVE SENDS A DOVISH SIGNAL The Federal Open Market Committee voted 9-1 to leave interest rates unchanged last week, and it also scaled back its rate hike expectations for 2016. The central bank’s latest dot-plot projects just two interest rate increases by the end of the year with a median forecast of 0.9% for the federal funds rate as 2017 begins. Fed policymakers now estimate economic growth of 2.2% in 2016, with inflation at 1.2% as the fourth quarter ends.1   CORE PRICES UP MORE THAN 2% IN 12 MONTHS The core Consumer Price Index measured 2.3% annualized inflation

MONTHLY NEWS AND INFORMATION FOR CURRENT AND FUTURE RETIREES WHAT ARE THE BEST (AND WORST) STATES FOR RETIREMENT? Every year, consumer financial services website tries to determine them through a survey of financial, health, and lifestyle factors. Its 2016 survey conveys a distinct message: for a nice retirement, avoid coasts and head west. For the second straight year, Wyoming ranked as the best state in which to retire. Three of its geographic neighbors (South Dakota, Colorado, and Utah) came in second, third, and fourth. Virginia was fifth, and it was the only state in the top ten east of

STOCKS SETTLE AT 2016 HIGHS A 5-day gain of 1.10% left the S&P 500 at 2,022.19 at the closing bell Friday. Settling at 17,213.31 Friday afternoon, the Dow Jones Industrial Average rose 1.20% for the week while the Nasdaq Composite advanced 0.67% to end the week at 4,748.47. On March 11, the S&P settled above its moving average for the first time since December 30, and both the S&P and DJIA had their highest closes of the year, reaching peaks unseen since intraday trading on January 4. (1) OIL RALLIES, GOLD RETREATS Light sweet crude closed at $38.50 a barrel


The Markets Stim-u-late mar-kets! Come on! It’s monetary easing.* The European Central Bank (ECB) was singing a tune that invigorated financial markets last week. The Wall Street Journal explained: “The fresh measures included cuts to all three of the ECB’s main interest rates, €20 billion a month of additional bond purchases atop the ECB’s current €60 billion ($67 billion) program, and an expansion of its quantitative easing program to highly rated corporate bonds – all more aggressive steps than analysts had anticipated. The central bank also announced a series of ultracheap four-year loans to banks, some of which could be

White House Proposes Changes to Retirement Plans

A look at some of the ideas contained in the 2017 federal budget. Will workplace retirement plans be altered in the near future? The White House will propose some changes to these plans in the 2017 federal budget, with the goal of making such programs more accessible. Here are some of the envisioned changes. Pooled employer-sponsored retirement programs. This concept could save small businesses money. Current laws permit multi-employer retirement plans, but the companies involved must be similar in nature. The White House wants to lift that restriction. (1,2) In theory, allowing businesses across disparate industries to join pooled retirement

Retirement Newsletter

MONTHLY NEWS AND INFORMATION FOR CURRENT AND FUTURE RETIREES HOW LONG WILL YOUR MONEY LAST? Assume you will live to be 90. It could happen: the Social Security Administration thinks that about 25% of today’s 65-year-olds will live to age 90 or longer. Will your savings be able to last that long? (1) As T. Rowe Price’s retirement calculator indicates, if you retire at 65 with $500,000 in retirement savings split between equities and bonds, there is about an 80% chance that your savings will last until age 95 if you draw them down by $20,000 (or its inflation-adjusted equivalent)

Monthly Economic Update March 2016

March 2016 THE MONTH IN BRIEF After a miserable January, the Dow Jones Industrial Average managed to gain 0.30% in February. While stock markets around the world struggled to advance, gold and oil rallied to a remarkable degree. U.S. economic indicators offered some bright spots, but also some disappointments. Housing indicators were mixed. Still, Wall Street seemed to show a tiny bit of optimism by month’s end (or maybe it was simply reduced pessimism). Investors hoped there would soon be less correlation between oil prices and stock prices. (1) DOMESTIC ECONOMIC HEALTH Judging from January’s personal spending report, it appeared

March 7, 2016 242,000 NEW JOBS CREATED IN FEBRUARY Hiring picked up in America last month. In reporting this sizable net job gain in the second month of the year, the Labor Department also revised December and January hiring totals upward by a total of 30,000. That means payrolls have expanded by an average of 228,000 hires over the past three months. The headline unemployment rate remained at 4.9% last month while the U-6 rate including the underemployed fell to 9.7%. A year ago, the U-6 rate was at 11.0%. (1) ISM INDICES BEAT EXPECTATIONS The Institute for Supply Management’s

Tightening Wallet

The Markets When Mark Twain’s death was reported in the United States, he was alive and well in London. He responded to news accounts with a note saying, “The report of my death was an exaggeration.” Last week’s jobs data suggest the same is true of reports that a recession is imminent in the United States. Barron’s explained: “Thank goodness the mid-February fears of recession that brought markets to their knees – and the 10-year Treasury yield to a low of 1.53 percent – were overblown. Friday’s nonfarm payrolls report was the latest confirmation. It showed that 242,000 jobs were

GOOD NEWS ABOUT CONSUMER SPENDING, Q4 GDP Personal spending and personal wages both increased 0.5% in January, according to the Bureau of Economic Analysis. The BEA also revised Q4 growth up to 1.0% from its initial estimate of 0.7%. As a footnote to all this, capital goods orders jumped 4.9% in January. (1) CONSUMER CONFIDENCE WANES The Conference Board’s much-watched monthly index tumbled 5.6 points in February to a 7-month low of 92.2. Rather than a significant monthly fall, the University of Michigan’s consumer sentiment index took only a small one: it declined 0.3 points from its final January mark


The Markets It wasn’t as entertaining as the Fantastic Four, The Magnificent Seven, or Ocean’s 11 but, last week, we had an opportunity to watch the Group of 20 (G20). The G20 stars finance ministers and central bankers from 19 countries and the European Union as well as representatives from the International Monetary Fund (IMF) and World Bank. The group meets periodically to discuss the global economy. At their most recent meeting, the G20 made a commitment to continue to pursue global growth through monetary policy. They also emphasized governments around the world need to do more. The IMF’s report