Greece Is Back in the Bond Market

A sign that Europe is lifting out of its lengthy economic doldrums: Greece has announced it plans to sell long-term government bonds, for the first time since the European Union bailed the country out two years ago. The fact that Greece expects there to be a market for its debt is a very good signal for the health of its economy.

The country is likely to have to pay a high interest rate on those bonds, though. Existing ten-year Greek debt is currently paying about 6 percent. A more stable economy, like Germany, is paying closer to 1.5 percent. Here in America, the ten-year Treasury bond is currently yielding 2.69 percent.

Those rates are a long way from where Greece was just a few years ago, though. As recently as 2012, ten-year Greek bonds were paying more than 30 percent, and they didn't slip under 10 percent for good until late last year.

Inflation and the Poor

Has inflation had much of an impact on your purchasing power recently? Probably not, since it's been running at a fairly muted 1.1 percent over the past 12 months. But a fascinating new study by the Web site FiveThirtyEight shows that the impact of inflation also varies by where you stand on the socioeconomic scale.

Items that the poor spend a higher proportion of their money on have had some of the highest inflation rates in the past year. The cost of electricity is up 4.7 percent; the cost of cigarettes is up 5.8 percent. Meanwhile, things we think of as primarily the province of the affluent haven't risen nearly as much. The cost of a new vehicle is up by just 1.5 percent; the cost of airfare has actually dropped in the past year, by 0.3 percent.

Add it all up, and the poorest fifth of American households have experienced an inflation rate that is 0.2 percent higher than that experienced by the rest of us. That's not a huge difference, but it's a few bucks a month for families that can't really afford it.

The First Quarter's Surprising Leaders

We're starting to see more figures trickle in from the first quarter of 2014, and one of the most surprising turnarounds has been among the precious metals mutual fund sector. These funds got beaten up pretty badly in 2013, posting the worst performance of any fund sector, but in the first quarter of this year, they're leading the pack, with a 12.4 percent average return. Over the past 12 months, though, those funds are still down by 30 percent.

Here are the other sector leaders among funds from the first quarter:

• Real estate, up 9.2 percent
• Utilities, up 7.1 percent
• Health care, up 6.7 percent
• Energy, up 3.5 percent
• Natural resources, up 3.1 percent
• Technology, up 2.1 percent
• Financials, up 1.5 percent
• Industrials, up 1.1 percent

March's Employment Milestone

This morning's jobs report marked a significant milestone for the American economy. In March we added 192,000 jobs, for the second strong month in a row following February's revised number of 197,000 jobs. And that means the private sector has finally returned to its pre-recession peak in terms of total employment, with the economy now having gained back the more than 8 million jobs it had lost.

Despite all the new jobs, and the fact that January and February's figures were also revised upward, the headline unemployment rate didn't change in March, remaining at 6.7 percent. That's in part because the Bureau of Labor Statistics also reported that the American work force expanded during the month.

Obviously, it's taken a long time to get here. According to the Labor Department, this has been the slowest jobs recovery on record since they began tracking such data back in 1939. But it might actually be gaining steam - the 192,000 private sector jobs added in March were the most in four months. All of March's new jobs were in the private sector, as government hiring stayed flat.

An Upside to Foreclosure

Here's an unexpected positive side to the foreclosure crisis: With so many American households going through drawn-out foreclosure processes, they were freed up to spend money on other things, like paying down other debts. The average foreclosure process lasted three years - meaning that many people weren't making any mortgage payments for that entire time.

The biggest benefit, according to new research from the Philadelphia office of the Federal Reserve, was that people paid down their credit cards. Credit card delinquencies for households in foreclosure declined during the recession, and card balances declined for six quarters while the foreclosures dragged on.

The Fed warns, however, that this is not likely to go on forever.The researchers expect that as people have to begin paying regular mortgages again, they won't be able to keep up with newly incurred credit card bills.

Home Sweet Homewnership

Recent research from the Federal Reserve has revealed a deep gulf in the wealth of Americans by age. The average family headed by someone under age 40 has recovered only about a third of the wealth it lost during the recession, while that of older families has recovered pretty much in full.

The Fed has identified the key reason for this: the housing crisis. So many younger families were caught up in the wave of foreclosures that the homeownership rate for this cohort has fallen dramatically. In 2005, 50.1 percent of young families owned homes, but that number dropped to 42.2 percent in 2013.

Since so much of our wealth is contained in our homes, the differences among the age groups have become staggering. The average real wealth of a family headed by someone under 40 was just $108,000 at the end of 2013, according to the Fed; for families headed by someone aged 40 to 61, that same figure was $691,000.

First Quarter Roundup

The first quarter of 2014 came to a close yesterday, and after some rocky going earlier on, the markets ended up turning in a respectable performance. The S&P 500 ended up increasing by 1.3 percent for the quarter, marking the fifth straight up quarter, which is its longest quarterly winning streak since 2007.

The Nasdaq similarly showed a modest gain for the quarter, rising by 0.5 percent. That index also marked a five-quarter winning streak. The Dow Jones industrial average was not so fortunate, dropping by 0.7 percent for the first quarter.

Even better is the performance of the Russell 2000 Small-Cap Index, which has now risen for seven consecutive quarters. But those small caps needed a last-second miracle - a 1.9 percent gain on the last day of the quarter - to bring the index above water.