Thursday, March 31, 2016

Those Brainy New Jerseyans

Here's something to be proud of: New Jersey ranks fourth in WalletHub's new survey of 2016' s Most and Least Financially Literate States. The only states that rank higher are New Jersey, Minnesota and Illinois.

New Jersey finished in the Top Ten for both "Planning & Daily Habits" and "Knowledge & Financial Literacy." But our thrift is what's most notable about the state: New Jersey finished first as the state with the fewest loans from non-bank lenders.

The least financially literate? WalletHub ranks Washington D.C. at the bottom of the list, but that of course is not a state. The lowest-ranking of the 50 states is Alaska.

Wednesday, March 30, 2016

Gas Prices Move HIgher

Are the days of cheap gasoline coming to an end? The average price for regular gasoline stood at $2.041 a gallon on Tuesday, according to AAA’s Daily Fuel Gauge Report - the highest so far in 2016. Prices have risen for 22 consecutive days and are up 30 cents a gallon for the month.

One reason for the upsurge: Demand for gasoline continues to grow. Last week’s report showed a 7 percent jump in gasoline product supplied over the last four weeks, to about 9.4 million barrels a day.

Taking a look at the bigger picture, however, the national average regular gasoline price is still pretty cheap compared with a year ago. At this time last year, gas was selling for about 38 cents a gallon more than it is now.

Tuesday, March 29, 2016

Consumers Take a Nap

The economy is looking fairly sleepy these days. Consumer spending edged up just 0.1 percent in February, on the heels of a downwardly revised 0.1 percent gain in January, the Commerce Department said yesterday. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was previously reported to have increased 0.5 percent in January.

Inflation, though small, has an effect on these numbers. When adjusted for inflation, consumer spending rose 0.2 percent in February, and inflation-adjusted consumer spending for January was revised down to show it unchanged rather than the 0.4 percent rise that was previously reported.

In the wake of the weak consumer spending and a similar slowdown in trade data, economists have dropped their first-quarter gross domestic product growth estimates to as low as 0.9 percent. The economy grew at a 1.4 percent pace in the fourth quarter of 2015.

Monday, March 28, 2016

No More Cash on the Barrelhead

There has been continuous growth in home sales in recent years, in almost every category. But one type of home sale has been dropping: all-cash sales. Cash sales accounted for about 34 percent of all home sales last year, according to CoreLogic, the lowest figure for that category since 2008.

It wasn't so long ago that nearly half of all home sales were being transacted in all cash. The record was set in January 2011, when 46.6 of all home sales were done in cash. A great deal of those were foreclosed properties bought up on the cheap by investors.  

The current status is still above historic norms for this category. Prior to the bursting of the housing bubble, all-case sales used to make up about 25 percent of the total housing market.

Friday, March 25, 2016

Upbeat Economic News

There's some good economic news out this morning from the Bureau of Economic Analysis: Real gross domestic product  increased at an annual rate of 1.4 percent in the fourth quarter of 2015, according to the government's third and final estimate. The first estimate had been a paltry 0.7 percent, and the second estimate was 1.0 percent.

The Bureau also released final overall numbers for 2015, in which the economy grew at 2.4 percent. That's exactly the same number that we saw for 2014, which suggests 2.4 percent as a "new normal."

There was also some down news released this morning: Corporate profits decreased by a whopping $159.6 billion in the fourth quarter of 2015. That follows on the heels of a decrease of $33.0 billion in the third quarter.

Thursday, March 24, 2016

The Generosity of Retirees

It's not a surprise that retirees donate more time to charity than younger workers; 45 percent of volunteer hours are provided by retirees, who obviously have more time on their hands than people still working. But it may be a surprise that they give more money, too.

Retirees gave 42 percent of all the financial charitable contributions in this country last year, even though they make up just 31 percent of the adult population. That's according to figures provided by Age Wave, which conducts research into aging trends.

They may have found out that giving is a key ingredient to a better retirement. Compared to those who do not volunteer or donate, retirees who give say they have a stronger sense of purpose, have higher self-esteem, and are both happier and healthier than those who do not contribute.

Wednesday, March 23, 2016

Americans' Confidence Is Wobbly

Are you confident about how you'll live in retirement? Only 21 percent of workers said they felt very confident about having enough money to live comfortably in retirement, according to a survey released yesterday by the Employee Benefit Research Institute.

Even so, this number is higher than it had been in recent years. In 2013, just 13 percent of the respondents in this survey said they were very confident. That number bounced up to 22 percent last year.

As in most endeavors, one of the keys to confidence is to have a plan. Twenty-six percent of workers who reported that they or their spouse had money in a defined contribution plan or individual retirement account were very confident about their financial security in retirement, compared with just 10 percent of those without a plan.

Tuesday, March 22, 2016

Hard Times for Miners

How bad has it gotten for the American natural resources industries? According to new data from the Commerce Department, the U.S. mining industry—a sector that includes oil drillers—lost more money in 2015 than it had made in the previous eight years.

Mining corporations with assets of $50 million or more recorded a collective $227 billion in after-tax losses last year. That loss essentially wipes out all the profits the industry had made since 2007.

In addition to the dropoff in oil revenues, mining revenues have also been falling sharply, down 38 percent in the fourth quarter from a year earlier. All told, since 2001, U.S. mining corporations had been profitable in every year but one prior to last year.

Monday, March 21, 2016

Funds Cutting Costs

If you're invested in mutual funds, you're probably paying less for them these days. New data from the Investment Company Institute shows that expense ratios for equity, hybrid, and bond mutual funds dropped to their lowest level in two decades in 2015.

Last year saw overall fund expense ratios decline by two basis points, to 0.68 percent, weighted by assets. That  followed a four-basis-point decline in 2014. Those fees have now fallen for six straight years.

In the category of bond funds, fund expense ratios fell three basis points, to 0.54 percent. The focal point for that decline was high-yield bond funds, which performed poorly last year and  in general are likely to have higher fees.

Friday, March 18, 2016

Turn Down the Volume

This week, the Dow Jones Industrial Average and the S&P 500 index both rose to close positive territory for the first time this year. But it doesn't look as if a lot of people are celebrating.

Trading volumes on Monday were the lightest of the year, and Tuesday was a close second. For the week, trading on the major U.S. stock exchanges fell to about 6.9 billion shares a day, below average for the month and the year.

By contrast, in January, when the market was tumbling, daily trading volumes reached their highest monthly average since 2011, with an average of 9.1 billion shares changing hands. On January 20, when the Dow Jones average fell nearly 250 points, trading on major U.S. exchanges topped 12.4 billion shares.

Thursday, March 17, 2016

The Fed's Look Forward

After yesterday's Federal Reserve meeting, the Fed Open Market Committee released its quarterly "dot plot," in which each member predicts where interest rates are headed. The median FOMC member predicts that rates will remain under 1 percent at the end of 2016, with a longer term target at just 3.25 percent.

Assuming that the Fed would continue raising rates a quarter of a percent at a time, that suggests only two more hikes are coming this year. The likeliest dates for those moves would be after Fed meetings in June and December.

The projections have come down since the last release, after December's meeting. At that point, the median FOMC member saw rates between 1.25 percent and 1.5 percent at the end of 2016, with rates eventually rising to around 3.5 percent in the longer term.

Wednesday, March 16, 2016

February's Conflicted Inflation Reading

The two key readings for inflation continue to diverge, according to numbers released this morning by the Bureau of Labor Statistics. The overall Consumer Price Index declined 0.2 percent in February, but the core inflation reading, including all items other than food and energy, increased 0.3 percent in the month.

The energy index was the entire cause of the decline in the all items index, more than offsetting increases in the indexes for food and for other items. The gasoline index fell sharply, declining 13.0 percent. The food index increased by just 0.2 percent in February,

Meanwhile, the core index increased 0.3 percent in February, the same increase as January. The apparel index rose sharply in February, increasing 1.6 percent, its largest increase since February 2009. The shelter index repeated its January increase of 0.3 percent, and the index for lodging away from home rose 0.9 percent.

Tuesday, March 15, 2016

New Jersey Leads the Way

The Labor Department released state by state unemployment figures for the past year on Monday, and the news was good for the Garden State. New Jersey saw a drop of 1.9 percentage points in its jobless rate from 2014 to 2015, from 6.4 percent to 4.5 percent. That is the single largest drop for any of the 50 states, by far.

The second largest drop was 1.2 percentage points, achieved in both Arkansas and Rhode Island. Six other states saw a drop of at least one percentage point.

At the bottom of the list is Wyoming, which saw its unemployment rate rise from 3.8 percent to 4.7 percent in the past year. Also seeing a rise in unemployment were such energy-producing states as North Dakota, Texas and Alaska.

Monday, March 14, 2016

We're Rich!

Thanks in large part to the housing recovery, U.S. households ended 2015 with their assets at the highest level in a decade. The net worth of U.S. households and nonprofits reached a record $86.8 trillion in the fourth quarter, according to a report that came out last week from the Federal Reserve.

The value of the real estate climbed to $25 trillion, against $9.5 trillion in mortgages. That works out to a total home equity for all Americans of more than $15 trillion.

Wealth climbed by more than $1.6 trillion between the third quarter and the fourth quarter. Remember, these figures are for the end of 2015, so we still don't know what effect the early-year stock-market slide had on overall wealth.

Friday, March 11, 2016

The Key to Oil Stocks?

The energy sector has been suffering badly in the stock market lately, driven down by the plummeting price of oil. But the web site MarketWatch has found some exceptions to that rule: oil-related stocks that carry very little debt.

The site took the 67 companies in the S&P 500 energy and materials sectors chose the 10  with the lowest levels of debt to equity as of September 30. The idea was that those companies could survive a period of weak profits, and be ready to increase capital spending, acquire weaker competitors or scoop up production assets on the cheap before prices eventually rebound, as they always do.

And they have performed well. Over the past two months, eight of those ten stocks have shown positive returns, a big surprise given they are all oil-dependent. The biggest winners are Helmerich & Payne, up 29 percent, and ExxonMobil, up 12 percent. The only losers in the group were Marathon and Valero.

Thursday, March 10, 2016

The Link Between the Economy and the Market

There's an obvious connection between the stock market and the larger economy - when the economy is humming, the markets tend to do well also. A recent report from Wells Fargo has quantified that relationship: Apparently, whether the economy is speeding up or slowing down can be a key signal as to where the market is headed.

According to Wells Fargo, since the recession, economic growth has accelerated in 12 quarters, and the stock market rose in 11 of those quarters. In the 15 quarters where growth was slower than in the previous one, the market was flat or fell.

GDP growth slowed between the third and fourth quarters last year, and this quarter has indeed been a weak one for the market. We won't have a reading on first quarter GDP for 2016 until the end of April.

Wednesday, March 9, 2016

Happy Birthday, Bull?

The bull market turns seven years old today - maybe. It's been seven years since the S&P 500 bottomed out on March 9, 2016, but we don't know yet if today's birthday celebration will turn out to be moot.

The S&P index reached a peak last May 21 and has yet to exceed that level. Should it fall more than 20 percent from that high of 2,130, then technically, the great bull actually ended back in May, and the market has technically been in a bear since then. At this point, the index is 3.9 percent below last May's high.

If the bull is still alive, it's certainly impressive. The current bull run would be at 84 months - the third-longest on record. Since bottoming out seven years ago, the S&P 500 is up by 193 percent.

Tuesday, March 8, 2016

What Women Want

More than half of all American women are feeling upbeat about their financial futures, and 42 percent are confident that their saving and investing decisions are on the right track, according to a new survey from BlackRock. This is a big improvement over last year’s survey, when less than half of women felt positive about their financial futures and only a third were confident about their financial decisions.

According to the survey, 43 percent of women and 41 percent of men have made a priority out of saving to ensure a comfortable retirement. However, 65 percent of men reported saving for retirement, compared with just 55 percent of women.

As a consequence, 75 percent of women surveyed were concerned about being able to achieve their retirement goals, versus 68 percent of men. The survey found that women and men on average had similar goals for an annual retirement income: $45,018 vs. $45,956, respectively.

Monday, March 7, 2016

Family Obligations

Have you ever been asked by a family member or friend for a loan? It's fairly common: About a quarter of U.S. households gave or lent a median of $1,000 to friends or family in the past year, according to a new study from the Pew Charitable Trust.

Not surprisingly, the poorest households were likeliest to find giving a burden, at 70 percent. But almost half of those making $85,000 or more also described their generosity as a burden on the household.

The way those wealthier families spread their money around takes on a fairly traditional path.  One in 10 adult children received help with a home purchase, Pew found, and 31 percent got financial help with their education.

Friday, March 4, 2016

February's Jobs Report

Another solid month for job growth in February: The economy added 242,000 jobs on the month, according to figures released by the Bureau of Labor Statistics this morning. The headline unemployment number was unchanged at 4.9 percent.

The number was strong enough to boost the 12-month average for the number of jobs added to 223,000 from 222,000. The Labor Department also revised its figures for December and January, adding 30,000 more jobs collectively for the two months.

Health care continues to be a big driver of job growth. Health care employment increased by 38,000 over the month, with 24,000 new jobs in ambulatory health care services and 11,000 at hospitals. Over the past 12 months, hospitals have added 181,000 jobs.

Thursday, March 3, 2016

Due for a Turnaround?

The market got off to an awful start this year, but since the S&P 500 hit a nearly two-year low in mid-February, it's up by 8.2 percent. Are even brighter skies ahead? In recent history, March and April have been the best back-to-back months for the S&P 500, according to data compiled by Bespoke Investment Group.

The index has risen by an average 2.7 percent in the two months over the past 50 years, the best two-month stretch for that period. The next best two-month stretch is November and December, when the index has risen by an average of 2.6 percent.

March already began with a bang as the large-cap S&P index jumped 2.4 percent Tuesday. That follows a January and February when the S&P 500 finished down 5.5 percent and the Dow 30 lost 5.2 percent - for both, their worst first two months to a year since 2009.

Wednesday, March 2, 2016

Measuring Up to the Last Generation

No matter what type of planing you've done for retirement, most American don't feel like their quality of life in retirement will measure up to the generation that went before them, according to a new survey from Willis Towers Watson. Three out of four Americans with jobs don't expect to live as well as their parents did in retirement, according to a survey of more than 5,000 currently working Americans.

In large part, it's a concern that their money won't last long enough. About 30 percent worry their savings will run out just 15 years into retirement. Fifty percent think their money will be gone within 25 years.

Somewhat surprisingly, America has fallen behind many other parts of the world in terms of how confident people are with their financial situation. According to Willis Towers Watson, the U.S. ranks behind India, Mexico, China, and Australia, among others, in terms of satisfaction with personal finances.

Tuesday, March 1, 2016

Habits of Wealth Accumulation

A new study suggests that it's possible to tell who has "wealth potential": people who have a high likelihood of becoming wealthy in the future. According to the research conducted by the firm DataPoints, it's all about the habits people keep.

Here are the five most critical habits that show whether someone is likely to accumulate wealth:
  1. Tracking spending on budget categories.
  2. Tracking expenses and receipts.
  3. Spending time on financial planning.
  4. Treating savings as sacred - never withdrawing from them for regular purchases.
  5. Investing steadily, even during downturns in the market.