Economic Update

TWO HOUSING INDICATORS HIT MULTIYEAR HIGHS While monthly real estate indicators are often later revised, the latest numbers for new home buying and pending home sales are impressive, indeed. The Census Bureau reported a 16.6% jump in new home sales in April, putting them at an 8-year peak. Housing contract activity surged 5.1% last month, according to the National Association of Realtors, reaching a level unseen since February 2006. The Wall Street Journal had forecast just an 0.7% April gain for the NAR’s pending home sales index.1 Q1 GDP REVISED UP; DURABLE GOODS ORDERS UP 3.4% How much did the

Weekly Market Commentary 5/31/2016

The Markets Everyone makes mistakes. Some people learn from them. In GMO’s March 2016 white paper, James Montier and Philip Pilkington continued to explore the Federal Reserve’s influence on the stock market. It was a process they’d begun in 2015 as they sought “…to understand why our forecast for the S&P 500 had been too pessimistic over the last two decades or so.” Inspired by research done at the New York Federal Reserve, they found: “…sometime around 1985 the market really started to react to FOMC [Federal Open Market Committee] days. Like the Fed economists, we found that for the

If your company sponsors a 401(k) plan, you must read this. The Labor Department has issued new rules for tax-advantaged retirement accounts. Potentially, they affect every 401(k) plan participant. They also impact IRA rollovers originating from 401(k) plans, and investment recommendations that may be made pertaining to any distributions from 401(k)s. Under the new rules, any financial services industry professional who makes investment recommendations to 401(k) plan participants, 401(k) plan sponsors, or IRA owners in exchange for compensation will be considered a fiduciary under ERISA. A fiduciary is someone who accepts a distinct, legally binding obligation to manage invested assets

May Flowers

MONTHLY NEWS AND INFORMATION FOR CURRENT AND FUTURE RETIREES WHAT ARE THE HALLMARKS OF A HAPPY RETIREMENT? There is no absolute answer to that question, but there are some factors that may make retirement more rewarding. The more control you have over when and how you retire, the happier you may be. In surveying retirees for their data-grounded book The Retirement Maze, authors Rob Pascale, Louis H. Primavera and Rip Roach learned that 69% of people who left work when they wished, retired happy, as opposed to just 36% of those forced to retire. Having a retirement income plan can

Weekly Market Commentary 5/16/2016

The Markets When is a door not a door? The answer, of course, is: When it’s ajar. Investors and analysts were trying to find the answer to a different riddle last week: When are strong retail sales not strong retail sales? The answer is: When the retailers are department stores. Consumers spent more in April than they have in more than a year. Commerce Department data showed April’s retail sales improved by 1.3 percent month-to-month and 3.0 percent year-to-year. Yet, several large department stores reported poor first quarter earnings and weren’t optimistic about the future, according to Barron’s. The Wall

Economic Update

A MAJOR JUMP FOR RETAIL SALES Friday, the Department of Commerce reported a 1.3% April gain in U.S. retail purchases. The core retail sales advance was also impressive at 0.9%. Minus car and truck buying, retail sales were still up 0.8% last month.1 IMPROVEMENT IN CONSUMER SENTIMENT The University of Michigan’s much-watched household sentiment index rebounded 6.8 points to 95.8 in its initial May reading. Surveys of Consumers chief economist Richard Curtin cited “frequent income gains, an improved jobs outlook, and the expectation of lower inflation and interest rates” as reasons for the sudden rise.2 WHOLESALE INFLATION PICKS UP The

The Markets Reading economic portents can be tricky. For example, do signs that economic growth is slowing – like last week’s employment report, which was anemic relative to consensus forecasts, and first quarter’s gross domestic product (GDP) growth – mean the economy is headed for trouble? Or, does it mean the economy is going to continue to grow slowly? It all depends on whom you ask. Some see current lackluster economic data as a harbinger of trouble. Last week, Barron’s cited an expert who was concerned about employment data. “…It could be a sign of trouble…Specifically, falling profit margins will

Economic Update

APRIL JOBS REPORT RAISES QUESTIONS Employers hired 160,000 more workers than they let go last month, and that net job gain was the smallest since September. Does this suggest a job market losing steam, or does it hint at an economy nearing full employment? The hiring number may make the Federal Reserve reconsider the possibility of a June interest rate hike. Average hourly wages improved to $25.53 in April, up 2.5% year-over-year. While the main jobless rate remained at 5.0%, the U-6 rate, counting both the unemployed and underemployed, declined 0.1% to 9.7%.1 MORE EXPANSION IN FACTORY & SERVICE SECTORS

Monthly Economic Update May 2016

THE MONTH IN BRIEF The S&P 500 managed to advance 0.27% in April as many companies beat earnings and revenue forecasts. Some important commodities posted remarkable monthly gains. Existing home sales rebounded, and manufacturing seemed to have recovered from its winter slump. Hiring continued to impress, but consumer spending figures and consumer confidence indices did not. All in all, it was a relatively calm month, absent of much of the volatility seen in the first quarter.1 DOMESTIC ECONOMIC HEALTH In early April, the Labor Department reported a net gain of 215,000 jobs in March, placing the average monthly net job

Economic Update

INCOME OUTDISTANCES SPENDING Personal income rose 0.4% in March, yet the Commerce Department reported personal spending up just 0.1%. That mild uptick contributed to a poor first quarter for GDP; last week, the Bureau of Economic Analysis estimated Q1 growth at 0.5%.1 CONSUMER OPTIMISM DECLINES The Conference Board’s consumer confidence index dipped 1.9 points in April to 94.2. Also descending was the University of Michigan’s consumer sentiment index, which ended April at 89.0 after concluding March at 91.0.1,2 A ROUNDUP OF HOUSING NEWS New home sales fell 1.5% in March according to the Census Bureau, after a 0.4% retreat in

Weekly Market Commentary 5/2/2016

The Markets “Which would you prefer to be: a medieval monarch or a modern office-worker?” If you immediately answered medieval monarch, take a moment to ponder life without “…modern dentistry, antibiotics, air travel, smartphones, and YouTube.” Last week, The Economist used this example to illustrate the challenges of accurately measuring living standards over time. For many years, countries and economists have relied on gross domestic product (GDP), the value of all goods and services produced by a country over a specific period of time, to gauge relative prosperity. The publication pointed out GDP may not be an accurate measure of