Thursday, October 17, 2019

Retail, Car Sales Slip

Retail sales fell 0.3 percent in September, the Commerce Department said yesterday. That ended a streak of six straight strong monthly gains that helped to fuel economic growth in the middle of the year.

Sales receipts fell almost 1 percent at auto dealers even though they reported a strong increase in the number of new vehicles sold. That means the dropoff likely reflects end-of-summer discounting and more corporate-fleet sales. Sales also declined 0.7 percent at gas stations, reflecting lower prices at the pump.

Retail sales were flat if gasoline and auto dealer receipts are excluded, but households also slashed spending on building materials and online purchases. Meanwhile, receipts at clothing stores rose by 1.3 percent, while furniture sales climbed by 0.6 percent.

Wednesday, October 16, 2019

Worries About Global Growth

The International Monetary Fund is growing more pessimistic about the global economy. The IMF’s latest World Economic Outlook trimmed its global growth forecast for this year by 0.2 percentage points and 0.1 percentage point next year, compared with the organization’s view from July.

That means global economic growth is expected to fall to 3 percent rate this year. That would be the slowest pace since the 2008 financial crisis, and down from a 3.8 percent pace seen in 2017.

Global trade growth reached just 1 percent in the first half of 2019, the weakest level since 2012. After expanding by 3.6 percent in 2018, the IMF now projects global trade volume will increase just 1.1 percent in 2019, which is 1.4 percentage points less than it forecast in July.

Tuesday, October 15, 2019

The Humble but Hot Money Market Fund

What's one of the hottest investment vehicles these days? The humble money market fund. Investors are flocking to the relative safety of money market funds at the highest level since the financial crisis began in 2008.

The industry has pulled in $322 billion over the past six months, the fastest pace since the second half of 2008, bringing assets to nearly $3.5 trillion, according to data from FactSet and Bank of America Merrill Lynch. Total money market assets are now at their highest level since September 2009.

This trend is more about safety than about returns. Money market funds are now yielding about 2 percent, down from the 2.47 percent they delivered at the beginning of 2019.

Monday, October 14, 2019

Nervous About Earnings

U.S. companies start reporting third-quarter results this week, and S&P 500 earnings for the July-September period look set to mark the weakest performance in about three years. Analysts are forecasting a 3.2 percent decline in earnings for the quarter from a year ago,

Banks will be in the spotlight this week, with J.P. Morgan Chase, Citigroup and Wells Fargo scheduled to announce on Tuesday, and Bank of America following up the next day. The financial sector is expected to show earnings growth of just 1.73 percent, according to S&P Global Market Intelligence.

And that's the second-strongest sector. The only sector projected at greater earnings growth is health care, at 1.83 percent. Seven sectors are forecast to produce negative earnings growth, with the worst being energy, expected to drop a whopping 31.58 percent.

Friday, October 11, 2019

How Americans Spend Their Money

Are you aware of how much you spend on various things each year? The folks at a website called How Much looked at census data to figure out where the average American family spends its money.

The average American "consumer unit" earns $78,635 in income each year, $11,394 of which goes to taxes. Then the rest goes to:

  • Shelter - $11,747
  • Pensions & Social Security - $6,831
  • Food at Home - $4,464
  • Utilities - $4,049
  • Vehicle Purchases - $3,975
  • Food Away from Home - $3,459
  • Health Insurance - $3,405
  • Entertainment - $3,226
  • Other Vehicle Expenses - $2,859
  • Other Housing Expenses - $2,270

Thursday, October 10, 2019

The Fed's Forecast

Federal Reserve officials were more worried about the U.S. economy by the time they met in mid-September, according to minutes of the central bank’s meeting that were released yesterday. They even noted that the probability of a recession had increased "notably" in  recent months.

“Participants generally judged that downside risks to the outlook for economic activity had increased somewhat since their July meeting,” the minutes said. "Particularly those stemming from trade policy uncertainty and conditions abroad.”

The Fed did not alter its official forecast that the economy would grow at a rate slightly above 2 percent this year. It also predicted that GDP would run slightly below 2 percent in both 2021 and 2022.

Wednesday, October 9, 2019

Producer Prices Continue to Slow

U.S. producer prices unexpectedly fell in September, leading to the smallest annual increase in nearly three years. The producer price index dropped 0.3 percent last month, the Bureau of Labor Statistics said yesterday. That was the largest decline since January and followed a 0.1 percent gain in August.

In the 12 months through September the PPI increased 1.4 percent, which is the smallest gain since November 2016. It had risen 1.8 percent in August; the Fed's target inflation rate is 2 percent. Excluding the volatile food, energy and trade services components, producer prices were unchanged in September.

Wholesale prices for goods fell 0.4 percent, with three-quarters of the decline reflecting the lower cost of gasoline. Wholesale food prices rose 0.3 percent, however.