Economic Update

RETAIL SALES RISE another HALF-PERCENT This healthy May increase follows the 1.3% gain recorded by the Department of Commerce for April, and offers more evidence that the economy has rebounded from a sluggish first quarter. Core retail sales (minus auto and gasoline purchases) were up 0.4% last month.1 INFLATION CONTINUES TO FIRM According to the Bureau of Labor Statistics, consumer prices rose 0.2% in May while producer prices advanced 0.4%. While a drop in food prices tempered the gain in the Consumer Price Index, the core CPI (which strips out energy and food costs) was up 2.2% in a year,

Economic Update

A LITTLE LESS OPTIMISM IN EARLY JUNE On Friday, the University of Michigan’s initial June survey of consumer sentiment showed a slight retreat, with the index coming in at 94.3 versus its final May mark of 94.7. The survey’s chief economist, Richard Curtin, noted “consumers rated their current financial situation at the best levels since the 2007 cyclical peak largely due to wage gains” and also had “record low inflation expectations.” On the downside, consumers felt the economy was stronger a year ago.1 YELLEN OFFERS NO HINT OF SPRING RATE HIKE Speaking in Philadelphia last week, Federal Reserve chair Janet

Monthly Economic Update June 2016

THE MONTH IN BRIEF Investors did not exactly “sell in May and go away” – the S&P 500 gained 1.53% last month. Oil prices settled into a sweet spot of sorts; they were high enough to soothe analysts, but not so high as to portend gas price spikes for consumers. Fundamental indicators pointed to an economy leaving its first-quarter doldrums behind; the real estate market looked especially hot. Hiring moderated, but retail sales, personal spending, and inflation picked up. It was enough to stir questions about an interest rate hike, and certain Federal Reserve officials publicly entertained that possibility.1 DOMESTIC

Economic Update

MAY SAW WEAKEST JOB GROWTH IN 5+ YEARS Did any economist foresee payrolls expanding by just 38,000 jobs in May? The median forecast compiled by MarketWatch projected a gain of 155,000, not the worst number since September 2010. The Department of Labor reduced March and April payroll gains by 59,000 in its new report, meaning monthly job creation averaged 116,000 in the past three months. As labor force participation declined 0.6% in May, the headline jobless rate fell to 4.7%. Annualized wage growth was at 2.5%.1,2 CONSUMERS FLEX THEIR PURCHASING POWER In better news, personal spending rose 1.0% in April

Economic Update

WILL THE FED MAKE A MOVE IN JUNE? In April, the Consumer Price Index advanced 0.4% – its largest monthly gain since February 2013. While a 10% leap in gasoline prices contributed to that rise, this and other recent signals of economic vigor may be influencing the Federal Reserve. Last week, minutes from the central bank’s April policy meeting showed Fed officials broadly agreeing that an interest rate hike could be appropriate next month if economic indicators strengthened and inflation accelerated. The CPI rose 1.1% in the year ending in April, but the yearly gain for the core CPI was

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

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

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

Economic Update

HOME SALES REBOUND Bouncing back from a drop of 7.3% in February, existing home sales improved 5.1% last month. In its March report, the National Association of Realtors announced a median sale price of $222,700, 5.7% higher than a year ago.1,2 BUILDERS BREAK GROUND ON FEWER PROJECTS While home sales increased last month, the pace of both housing starts and building permits declined. Census Bureau data shows an 8.8% reduction in groundbreaking for March. Building permits were down 7.7% for the month.1,2 OIL PRICES RISE FOR A THIRD STRAIGHT WEEK WTI crude settled at $43.73 on the NYMEX Friday. Expectations

Economic Update

HOW WEAK WAS FIRST-QUARTER GROWTH? Economists have reason to wonder given the latest retail sales, industrial output, and inflation figures. Overall retail purchases fell 0.3% in March, though they rose 0.2% minus auto buying; analysts polled by MarketWatch expected a 0.1% gain for the headline number and a 0.5% gain for the core number. Industrial production slipped 0.6% in March, matching the retreat in February. The Consumer Price Index rose only 0.1% last month while the Producer Price Index declined 0.1%.1 CONSUMERS A BIT LESS UPBEAT The preliminary April consumer sentiment index from the University of Michigan came in at

Economic Update

FED: APRIL MIGHT BE TOO SOON FOR A RATE HIKE That was the message Wall Street gleaned from the Federal Reserve’s March policy meeting minutes. Several Fed officials, the minutes stated, felt that “raising the target range as soon as April would signal a sense of urgency” that would be untimely. Another passage noted broad support for “a lower path of the federal funds rate relative to December” (in other words, a shallower ascent for the benchmark interest rate across 2016). Still, some officials saw merit in an April rate move should economic indicators show significant upside.1 PACE OF GROWTH

Quartlery Economic Update

A review of 1st Quarter 2016 THE QUARTER IN BRIEF In investing, patience is often a virtue. For an illustration of why it matters, simply look at the opening quarter of 2016. Stocks plunged in January and fell further in early February, and a bear market seemed a possibility. Then, Wall Street turned around. The Dow staged its greatest quarterly comeback in 83 years, rising more than 7% in March alone and ending March slightly positive YTD. The S&P 500 and Nasdaq Composite each gained more than 6.5% in March. It was a quarter marked by rebounds; in stock indexes,

THE MONTH IN BRIEF The bulls ran back to Wall Street in March; the Dow, Nasdaq, and S&P 500 all gained more than 6% for the month, with the Dow and S&P returning to positive territory for the year. Oil prices continued to recover. The Federal Reserve left interest rates unchanged, and it also sent investors a dovish signal about raising rates across the rest of 2016. Though terrorist attacks in Belgium unnerved investors around the world, financial markets held up in their wake. Hiring and consumer confidence were strong, manufacturing grew stronger, and the economic news out of Europe

Economic Update

Here is a PDF of Weekly Economic Update 4-4-2016. ANOTHER SOLID JOBS REPORT The latest Labor Department employment report shows net job gains of 215,000 for March. Labor force participation increased last month, and the jobless rate consequently ticked up to 5.0% (the broader U-6 rate edged up to 9.8%). Mean hourly wages rose 7 cents to $25.43, up 2.3% year-over-year. Payrolls expanded by an average of 209,000 hires per month during the first quarter.1 MANUFACTURING SECTOR GROWS Rising to a March reading of 51.8, the Institute for Supply Management’s manufacturing PMI indicated sector expansion once again. In February, the

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

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

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

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