Monday, January 15, 2018

The Full Employment Question

Are we at full employment? The vast majority of economists surveyed this month by The Wall Street Journal think we're just about there. Asked if the U.S. economy has reached full employment, 42 percent said yes and an additional 48 percent said no, but that it’s close.

“Full employment” doesn’t necessarily mean every American who wants a job has one. Economists use the term to describe the point where unemployment can’t go any lower without generating price and wage pressures.

The U.S. unemployment rate was 4.1 percent in December, remaining at its lowest level in 17 years. It has come down from a peak of 10 percent in the immediate aftermath of the 2007-09 recession.

Friday, January 12, 2018

The Dow's Midpoint Record

The Dow Jones Industrial Average knocked out yet another record yesterday in its rise to new heights. After knocking out a round-number milestone at 25,000, the index then posted its fasted run to a midpoint milestone. It reached 25,500 in just seven trading sessions.

The previous record for such a midpoint advance was the move to 24,500, hit after December 12 after a blistering eight sessions for the Dow. By contrast, the Dow took 17,476 days to reach its first midpoint, when it went from zero to 500, which it finally hit on March 12, 1956.

Perhaps a more fair comparison would be when the Dow took 1,423 trading sessions to go from 14,000 to 14,500. That took place after the Dow crashed at the outset of the recession; it hit 14,000 in July 2007, but didn't reach 14,500 until March of 2013.

Thursday, January 11, 2018

Money Woes and Marriage

Do you and your spouse fight about money? Nearly half of Americans (48 percent) who are married or living with a partner say they argue with the person over money, according to a survey of more than 1,000 people by The Cashlorette.

Most of those fights are about spending habits, with 60 percent saying that one person spends too much or the other is too cheap. The scary part: At least two studies show that this could lead to divorce. Data released Wednesday by financial firm TD Ameritrade found that 41 percent of divorced Gen Xers and 29 percent of Boomers say they ended their marriage due to disagreements about money.

The worst time to be doing this is early on in your relationship, watch out: That may be the No. 1 predictor of whether or not you’ll end up divorced, according to a study of more than 4,500 couples published in the journal Family Relationships.

Wednesday, January 10, 2018

The Worries of Gen X

Gen X investors are worried about retirement but aren't well-equipped to address their plans, according to a study released Monday by Jefferson National. The study showed that 52 percent of Gen X investors do not have an advisor, and are least likely to seek advice even though they are in their prime earning years, between the ages of 37 to 52.

Of particular note for advisors was the survey finding that 30 percent of Gen Xers said their number one reason for having an advisor was concern about saving enough for retirement. Their second main reason — feeling confident in their financial future — trailed by 10 percentage points.

In contrast, 36 percent each of baby boomers and older investors and 27 percent of millennials cited feeling confident in their financial future as the number one reason for seeking financial advice. Only 15 percent of millennials and 12 percent of boomers said retirement saving was their chief reason.

Tuesday, January 9, 2018

The Credit Boom

One sign of a hot economy: Consumer borrowing rose in November by the largest monthly amount in 16 years, the Federal Reserve said yesterday. Total consumer credit increased by a solid $28 billion in November to a record high of $3.83 trillion. The annual growth rate was 8.8 percent.

Credit-card borrowing powered the increase. Revolving credit, which is mostly made up of credit-card loans, expanded to an annual rate of 13.3 percent in November, the fastest pace since last December and well above the 9.9 percent gain in October.

Nonrevolving credit, which covers loans for education and cars, rose at an annual rate of 7.2 percent in November. That's the fastest pace for that figure since October 2016.

Monday, January 8, 2018

Tough Year for Carmakers

Last year was a banner year for the stock market, but not so much for automakers. The seven-year winning streak that began after the recession in 2010 fell short in 2017 with sales down 1.8 percent compared to 2016. All told, the year saw 17.2 million vehicles sold.

The full-year results for individual automakers:

  • Subaru, up 5.3 percent
  • Nissan, up 1.9 percent
  • Honda, up 0.2 percent
  • Toyota, down 0.6 percent
  • Ford, down 1.1 percent
  • General Motors, down 1.3 percent
  • Fiat Chrysler, down 8.2 percent
  • Hyundai-Kia, down 8.9 percent

Friday, January 5, 2018

December's Jobs Report

The pace of hiring slowed in December, with employers adding 148,000 jobs, the lowest number since September, the Labor Department said this morning. That brought employment gains for the year to 2.1 million. The headline unemployment rate remained at 4.1 percent.

Employers added better than 2 million jobs for the seventh straight year in 2017. It is only the second time on record—the other being in the 1990s—when the economy has produced jobs at that pace for that long.

An unexpected loss of 20,000 retail positions during the holiday season held back the December jobs number. The biggest gains came from health care (31,000), construction (30,000) and manufacturing (25,000). Bars and restaurants added 25,000, while professional and business services grew by 19,000.