Biggest Winners of 2019

Four of the stocks in the S&P 500 literally doubled in value this year. On the final day of 2019, these have been the best-performing stocks in the S&P for the year:

1. Advanced Micro Devices: up 150 percent
2. Lam Research:  up 120 percent
3. KLA Corp.: up 104 percent
4. Target: up 102 percent
5. Chipotle: up 94 percent
6. Xerox: up 93 percent
7. Qorvo:  up 92 percent
8. Applied Materials Inc.:  up 90 percent
9. Copart:  up 90 percent
10. Leidos Holdings: up 89 percent

Many Unhappy Returns

Do you know what National Returns Day is? It's a fairly new "holiday," taking place each year on January 2. And for the seventh straight year, it's going to be a record setter.

United Parcel Service said last week that it forecasts a record National Returns Day, with 1.9 million returns expected. That will be up 26 percent from last year. Optoro, a returns logistics company, forecasts $100 billion in returns for the holiday shopping season, up $6 billion from 2018.

The reason for the increase of all these returns is the growth of e-commerce activity. And the ease of returning an item is growing in importance as well: The UPS Pulse of the Online Shopper study found that 73 percent of online shoppers base their decision to make another purchase from a retailer on the return experience.

Retirements Changes in a Decade

What has happened to retirement in America over the past decade? To a certain extent, it has become a tale of two very different realities. Remember, in 2010, the economy was just beginning to recover from the worst recession and financial crisis in recent memory, and millions of workers were worried that their retirement plans were ruined.

Now, the landscape is very different. The Employee Benefit Research Institute has developed a model that simulates the percentage of households likely to have adequate resources to meet retirement expenses, and their model shows that the highest-income households have seen their odds of a successful retirement improve sharply during this decade. Middle-income households, meanwhile, have seen some gains, but still have only 50-50 odds of success. But sadly, the lowest-income households have seen their retirement prospects diminish sharply — among these boomers approaching retirement, their odds of success have fallen during the decade from 26 percent to 11 percent.

Just 52 percent of American households owned retirement accounts in 2016, according to Federal Reserve data, not much changed from 2010, when that figure stood at 50 percent. But among households that had workplace retirement plans, the gains have been substantial. According to Vanguard, average account balances jumped 22 percent from 2006 to 2018.

Worst Stocks of the Decade

It’s always a little unfair to list the worst stocks over any long period of time, since the absolute worst ones will have gone out of business long before the time frame ends. Nevertheless, here are the worst-performing S&P 500 stocks from the decade of the teens, counting only those that are still around to tell the tale:

Schlumberger: Down  46 percent
Occidental Petroleum: Down 51 percent
Perrigo: Down 58 percent
Kraft Heinz: Down 58 percent
Under Armour: Down 60 percent
CenturyLink: Down 61 percent
Mosaic: Down 69 percent
Devon Energy: Down 71 percent
Freeport-McMoRan: Down 73 percent
Apache: Down 82 percent

Thoughts for Christmas Day

Christmas is a season for kindling the fire for hospitality in the hall, the genial flame of charity in the heart. ~ Washington Irving

The thing about Christmas is that it almost doesn't matter what mood you're in or what kind of a year you've had - it's a fresh start. ~ Kelly Clarkson

Before we took down the tree each year, Dad would always say a prayer that we would be together the next Christmas. I cling to that prayer, which serves as a reminder that it's important to be grateful in the present for the people you love because, well, you never know. ~ Catherine Hicks

Looking Ahead to 2020

It has been a notably strong year for U.S. equity markets, with the S&P 500 boasting a gain of 28.5 percent, while the Dow Jones Industrial Average is up 22 percent in 2019. The Nasdaq exceeds them both, with a gain of 34.5 percent.

That performance has some wondering if we’re due for a bounceback, if this powerful ascent will translate into a down market in 2020. However, if statistics over the past 70 years hold true, next year is likely to produce healthy, if not stellar, gains.

The S&P 500 tends to ring up an average annual gain of 11.2 percent when it finishes the preceding year with an advance of at least 20 percent, and gains 83 percent of the time, according to Dow Jones Market Data figures going back to 1950. The Dow tends to climb 75 percent of the time, with an average return of about 8.9 percent in the following year, when it finishes the previous year with a return of at least 20 percent.  And the Nasdaq returns 14.2 percent on average, rising about 78 percent of the time, when it has registered a return of at least 30 percent in the prior year.

Biggest Winners of the 2010s

We're approaching not just the end of the year but the end of the decade. According to Bespoke Investments, these are the ten stocks that have been listed in the S&P 1500 for the entire decade that have returned the most (through December 17):

1. Patrick Industries, up 4,622 percent
2. Netflix, up 3,909 percent
3. Domino's Pizza, up 3,382 percent
4. LendingTree, up 3,017 percent
5. MarketAxess, up 2,587 percent
6. Repligen, up 2,099 percent
7. ABIOMED, up 1,950 percent
8. Lithia Motors, up 1,792 percent
9. Trex, up 1,698 percent
10. Heska, up 1,683 percent

The State of the Raise

Did you get a raise in 2019? An estimated half of U.S. workers say they didn’t get a raise in the past year, a new Bankrate survey shows. But even that's an improvement over the previous year’s figure of 62 percent.

Some 49 percent of workers reported having received a pay increase in some form, including 28 percent who got a pay bump, 12 percent who got a higher-paying job and 10 percent who got both.  That figure was an 11-percentage point increase over last year, and the highest since 2016.

The results also showed an uptick from last year in pay increases that were based on performance (38 percent this year vs. 37 percent last year) or as part of a promotion or new job responsibilities (31 percent this year vs. 29 percent last year). But there continues to be a decline in raises given as cost-of-living increases (26 percent this year vs. 27 percent last year).

What the SECURE Act Could Mean to You

Earlier this week, the House passed a $1.4 trillion spending bill that includes the bipartisan SECURE Act, which aims to increase the ranks of retirement savers and the amount they put away. The measure now will head to the Senate, where approval is expected this week before lawmakers head home for the holiday recess.

If the legislation passes, here are some of the things that might affect you:

• The maximum age for making contributions to traditional IRAs, which is now 70½, would be repealed
• The age when required minimum distributions from certain retirement accounts must start would rise to 72, up from 70½
• It would become easier for small businesses to band together to offer 401(k) plans to their employees

The Declining Car Loan

What's happening to car loans in America? A Federal Reserve Bank of New York survey of consumer credit out this week showed a spike in the rate of auto-loan rejections, to 8.1 percent in October from 4.5 percent last October. For the full year, the average rate of car-loan rejections was 7.1 percent, up from 6.1 percent for 2018.

But at the same time, applicants reported fewer denials in other parts of the $14 trillion consumer debt market for the same period. Rejection rates for credit cards, mortgages, and mortgage refinance applications all declined compared to 2018.

Indeed, for the most part, the availability of credit has been increasing. The percentage who applied and were granted credit over the last 12 months increased 1.2 percentage points to 37.7 percent in 2019. The proportion who were rejected declined from 9.1 percent in 2018 to 8.0 percent in 2019.

What Does 2019 Mean for 2020?

While 2019 isn't quite over yet, is it possible the first 11 months of this year bode well for next year? The markets soared heading into the final month of the year, with the S&P 500 gaining over 25 percent through the end of November.

History shows that as a promising sign for next year. Since 1990, the S&P 500 has gained at least 20 percent from January through November on six other occasions. The S&P 500, Dow and Nasdaq have turned in big years — measured from December to December — 100 percent of the time after similar S&P 500 gains through November.

How big? The S&P and Nasdaq gains have averaged above 18 percent in the years following those strong January-through-November periods. The Dow has posted an average gain of 15 percent.

Health Worries for Rich and Poor

It will come as no surprise that health concerns weigh on Americans across the wealth spectrum, millionaires included. Fidelity Investments’ most recent Millionaire Outlook Study, which analyzed the investing attitudes and behaviors of some 2,000 households, found that concerns about health were the main source of stress for both millionaires and their less-wealthy counterparts.

More than one-third of both non-millionaire and millionaire investors had health-related concerns, which accounted for the largest proportion of their overall stress. In terms of health, millionaires worried, first, about their weight, then their own health and then their family’s health. For non-millionaires, weight was also first, but it was followed by their family’s health and their own health.

Of the millionaires who reported higher levels of stress, fewer than half said they felt confident about their health. On the other hand, 86 percent of those who reported lower stress levels felt confident about their health.

Waiting to Take Your Retirement Money

Here’s an odd retirement trend: Millions of workers who contribute to a 401(k) plan do so in order to have money when they retire. But when they do retire, in increasing numbers, they are’t touching those accounts - at least not right away.

More than half of workers — 55 percent — are choosing to leave their assets in their former employer’s 401(k) plan a year into retirement, according to Fidelity data on its workplace retirement accounts. Four years ago, that figure was just 45 percent.

Why does this happen? Some retirees may not touch their 401(k) plans because they don’t need the money yet. Wealthier clients avoid withdrawing from 401(k) plans until they’re 70½ years old, which is around the time they must withdraw required minimum distributions. Given that many recent retirees have done very well in the markets, Fidelity speculates that some retirees may not be sure what to do with that money, such as rolling it over into another account or consolidating all of their 401(k) plans.

November's Jobs Report

Some strong news for the economy out today: The government reported this morning that the economy added 266,000 jobs in November. The unemployment rate ticked back down to 3.5 percent, matching a low from earlier this year that at the time was the lowest since 1969.

The U.S. economy has now added an average of 180,000 jobs each month this year, compared with an average monthly gain of 223,000 in 2018. November marked the 110th consecutive month of job gains.

The strongest industry in November was the health care and social assistance subsector (including child daycare and family services) saw a net gain of 60,200 jobs. Manufacturing technically had its best month for hiring since August 1998, although that was almost entirely thanks to General Motors workers returning from their strike.

Waiting for the Earnings Rebound

Two months into the fourth quarter, analysts have shaved 4 percent off their earnings estimates to $41.12 a share. That's a drop of almost 1 percent compared with a year ago, following a 1.3 percent decline last quarter.

It's common for earnings expectations to drop as a period progresses, but the current pace has been exceeded only twice since 2015. Analysts now expect earnings to rebound sometime next year, although it might be well into 2020 before profits rise meaningfully. The consensus forecast is for a 9.2 percent gain for next year.

Eight months ago, analysts projected fourth-quarter profits would jump more than 9 percent after falling in the first few months of the year. They now see contraction for this quarter and don’t expect a return to 10 percent growth until the second half of 2020.

Manufacturing Slump Continues

Tough news for the economy: Manufacturing activity continued to lag in November with a decline in inventories and new orders, according to the latest ISM Manufacturing reading. The November reading came in at 48.1, down slightly from the previous month’s reading of 48.3.

The number denotes the percentage of manufacturers planning to expand operations. A reading below 50 represents contraction; November was the fourth straight month below the expansion level.

Manufacturing is considered a reliable bellwether for how the rest of the economy is doing, though it accounts for only about one-fifth of GDP. Inside the ISM report, new orders slumped to 47.2, down 1.9 percentage points from October’s 49.1. Inventories, a key input for GDP, came in at 45.5, down 3.4 points from the previous month.

Good News From Black Friday

Americans spent more money Black Friday shopping in 2019 than ever before. Brick and mortar sales were up 4.2 percent over last year, according to an annual holiday spending report from Fiserv, Inc.

Electronics and appliances accounted for $214 per transaction on average, while shoppers spent $101 on sporting goods and $81 on shoes and clothing. Shoppers were willing to travel for a discount: A quarter of consumers traveled more than 25 miles to visit a physical store.

Online shopping also pulled in a record $7.2 billion on Friday, according to Salesforce. That's a 14 percent increase over last year. Even on Thanksgiving itself, digital sales in the U.S. rose 17 percent to $4.1 billion.

Thoughts for Thanksgiving Day

"Gratitude can transform common days into thanksgivings, turn routine jobs into joy, and change ordinary opportunities into blessings." ~ William Arthur Ward

“If you made a list of all the things you could be thankful for, the list would undoubtedly be longer than your misfortunes.” ~ Catherine Pulsifer

“If a fellow isn’t thankful for what he’s got, he isn’t likely to be thankful for what he’s going to get.” ~ Frank A. Clark

Big Day for Retail

As we head into Black Friday and the holiday shopping season, there were some bright signs for retail stocks yesterday. Among the good news:

• Best Buy posted quarterly earnings that beat analyst expectations, and raised its fiscal 2020 earnings forecast, sending its stock up more than 9 percent.
• Dick’s Sporting Goods rallied more than 18 percent on better-than-expected earnings.
• Amazon shares closed 1.3 percent higher. 
• The SPDR S&P Retail ETF, a broad-based basket of retail stocks, climbed 0.6 percent.

Worrisome Numbers for the Fourth Quarter

Consumer confidence dipped for a fourth straight month in November as economic conditions weaken toward the end of 2019, according to data released this morning by the Conference Board. The Board’s consumer confidence index dipped to 125.5 this month, down from 126.1 in October.

This is just the latest piece of data pointing to weaker economic growth to end the year. The New York Federal Reserve’s Staff Nowcast, which estimates quarterly GDP growth, points to an expansion of just 0.7 percent in the fourth quarter. The Atlanta Fed’s GDPNow measure indicates growth of just 0.4 percent.

On the other hand, expectations for the holiday shopping season are strong. The National Retail Federation expects holiday sales to grow by about 4 percent from last year.

Crash of a Highflier

Among global companies with a market cap of at least $1 billion, ArtGo, a marble mining company, had enjoyed the biggest gain of the year, according to Bloomberg. It was up an incredible 3800 percent since the beginning of the year. Until this week.

But that all went poof in a big way when New York-based MSCI dropped plans to add the company to its equity benchmarks. ArtGo, which has been losing money for two years, apparently ended up not meeting the necessary standards for MSCI listings.

So all those gains have now been wiped out. ArtGo, which is listed on the Hong Kong market, were down 98 percent Thursday. It lost $5.7 billion in market value in a single day.

Good News From the Fed

Yesterday, the Federal Reserve released the minutes from its October policy meeting, where it had cut interest rates for a third time this year. Fed officials generally agreed that they likely won’t need to cut interest rates again unless economic conditions change significantly,

Discussions at the meeting indicated that members feel the U.S. economy is in a fairly strong position. They agreed that we're enjoying a healthy labor market and strong spending appetite among consumers, whose activity accounts for about 70 percent of GDP.

However, Fed officials also see “the downside risks surrounding the economic outlook as elevated, further underscoring the case for a rate cut,” they reported. They cited reduced business investment and exports resulting from “weakness in global growth and elevated uncertainty regarding trade developments” as a concern.

A Strong Move for Housing

U.S. homebuilding rebounded in October, with permits for future home construction jumping to a more than 12-year high, the Commerce Department said yesterday. The report also showed an increase in home completions and the stock of homes under construction.

Housing starts increased 3.8 percent, with single-family construction rising for a fifth straight month. On a year-over-year basis, housing starts advanced 8.5 percent in October.

Building permits surged 5.0 percent to a rate of 1.461 million units in October, the highest levels for that category since May 2007. Permits were driven by the single-family housing segment, which increased 3.2 percent to reach their highest level since August 2007.

For Bonds, the Kids Know Best

Which generation group best understands how to invest in bonds? According to a new study by BNY Mellon Investment Management, millennials have a slightly better grasp than older investors of the role fixed income plays in retirement planning and how the asset class responds to market cycles.

Asked by pollsters when average investors should consider adding fixed income to their investment portfolios, 36 percent of millennials said they did not know, compared with 45 percent of baby boomers. Not only that, just 32 percent of boomers reported having a fixed income allocation in their portfolio, versus 43 percent of millennials.

About 80 percent of boomers insisted that fixed income investing was intended only for retirement planning, compared with 70 percent of both millennials and Gen Xers who held this view.  In addition, while 65 percent of millennials surveyed said all bonds provided the same level of risk, 76 percent of boomers believed the same thing.

Another Record for the Bull

By one measure, this current bull market in history is now the best ever. The current market boom has recorded a whopping 472 percent gain for the S&P 500. That makes this the biggest-returning bull run since World War II, according to research from the Leuthold Group.

The previous record was set by the bull market from 1949 to 1956, which scored a 454 percent gain for the S&P 500. The explosive bull run in the 1990s saw the S&P 500 rally 391 percent, while the bull market of 2002–2007 pulled off a 121 percent gain for the index.

The current run has already been recognized as the longest bull market in history. The S&P 500 bottomed out on March 9, 2009, which means we have been in a bull market for more than ten and a half years now.

Uber vs. New Jersey

A few weeks ago, we mentioned the rough quarter Uber had, losing more than a billion dollars. Now they're in trouble here in New Jersey: Uber Technologies Inc. owes the state about $650 million in unemployment and disability insurance taxes because it has been misclassifying drivers as independent contractors.

Uber and subsidiary Rasier LLC were assessed $523 million in past-due taxes over the last four years, the state Department of Labor and Workforce Development said in a pair of letters to the companies. There's another $119 million due in interest and penalties on the unpaid amounts.

The state’s decision is limited to unemployment and disability insurance, but it could also end up meaning that Uber is required to pay drivers minimum wages and overtime under state law. Uber’s costs per driver (as well as those of Lyft) could jump by more than 20 percent if they are forced to reclassify workers as employees.

Where the Inflation Is

The Labor Department said on Wednesday its consumer price index increased 0.4 percent last month, the largest gain in the CPI since March. Energy accounted for more than half the increase, but Americans paid higher prices for gasoline, used cars, medical treatment and recreation in October.

Gas prices surged 3.7 percent in October, but Americans are still paying less to fill up now than they did a year ago, with the cost of gas about 7 percent lower. Prices for medical care rose 1 percent in October, marking the biggest increase in more than three years. The cost of recreation — ticket prices, cable TV and the like — also posted an increase of 0.7 percent, the biggest monthly gain since 1996.

The increase in the cost of living over the past 12 months edged up to 1.8 percent from 1.7 percent. But that means it’s still well below last year’s peak of nearly 3 percent.

The Rare Flat Dow

Here's an anomaly for you: The Dow Jones Industrial Average closed at precisely 27,691.49 yesterday, which means the index produced its flattest finish since April 24, 2014, according to Dow Jones Market Data. The Dow had closed at 27,681.29 on Friday, which means it rose just over 10 points yesterday, which rounds off to 0.00 percent.

Finishing a session virtually unchanged is a rarity; before that date in 2014, it hadn't happened in 12 years. The last time the index finished flat after a record close was 1994, according to Dow Jones Market Data.

Flat finishes were more common for the Dow before 2001. That's the year that the New York Stock Exchange converted to the decimalization quote system, allowing investors to trade in increments of pennies, rather than the old system of eighths or sixteenths of a dollar.

Where Volatility Is Headed

Has the volatility washed out of this market? The CBOE Volatility Index, or VIX, which is widely considered to be the best volatility gauge in the market, hit its lowest level since July at the end of last week.

Moreover, short bets on VIX futures contracts hit a record high last week. Typically, when markets are at a record high, traders tend to load up on VIX calls to bet on a downturn. But this time, they are betting on further stock gains and even lower volatility.

This isn't necessarily good news. A lot of market-watchers see this as a contrarian indicator, thinking that when you see a huge amount of excessive optimism in the market, you often tend to get a snap back in the other direction.

Thoughts for Veterans Day

“To us in America, the reflections of Armistice Day will be filled with solemn pride in the heroism of those who died in the country’s service and with gratitude for the victory.”  ~ Woodrow Wilson

“Only the dead have seen the end of war.” ~ George Santayana

“Veterans know better than anyone else the price of freedom, for they’ve suffered the scars of war. We can offer them no better tribute than to protect what they have won for us.” ~ Ronald Reagan

A Little More for the 401(k)

There's a little good news for taxpayers out this week from the IRS: The amounts that people can contribute to retirement plans have, for the most part, inched up for 2020. Employees in 401(k) plans would be able to contribute as much as $19,500 in 2020, up from $19,000.

Participants in 403(b), most 457 plans and the federal government’s Thrift Savings Plan will also see their contribution increased to $19,500. The catch-up contribution limit for employees 50 and older who participate in these plans will increase to $6,500 from $6,000.

One that didn't step up: The limit on annual contributions to an IRA remains unchanged at $6,000. The additional catch-up contribution limit for individuals aged 50 and over also remains $1,000.

Peak Buyback

Corporations are on pace to provide $480 billion in bids for S&P 500 stocks this year, according to an analysis by Goldman Sachs. That means that stock buybacks will have provided more demand for equities than any other source in 2019, including households, mutual funds or exchange-traded-funds.

How much money is that? Look at it this way: In 2019, S&P 500 companies paid out more than 100 percent of their free cash flow in the form of dividends and buybacks.

But this key source of market support may have already peaked. One study shows that Russell 3000 small-cap companies have announced $795 billion in buyback authorizations in 2019, a 12 percent decline from the roughly $900 billion authorized last year. Overall, Goldman Sachs predicts that share repurchase authorizations will fall another 5 percent in 2020.

The New Face of Charitable Giving

Tax reform has prompted many taxpayers to change the way in which they make charitable donations, according to a new study from Fidelity Charitable. Half of surveyed taxpayers reported that they had made at least one change in their charitable giving strategy since the new tax law went into effect, such as donating appreciated stock, “bunching” several years of charitable gifts into a single year or contributing to a donor-advised fund.

The good news is, these changes haven’t affected the sums that people are able to give to charity. According to the survey, 76 percent of taxpayers said they had donated about the same amount to charity in 2018 as they had the previous year, and 15 percent gave more.

Why do people give more? Thirty-two percent of respondents who gave more than they had in 2017 cited a request from a nonprofit or involvement in a pledge or campaign. Thirty-one percent said their increase was due to a salary increase or to interest in a charitable cause.

How to Lose a Billion Dollars

It takes a very special kind of company to lose a billion dollars in a quarter, but Uber proved yesterday that it was up to the challenge. Uber reported a net loss of $1.16 billion in the third quarter, topping its $986 million loss during the same quarter last year.

For the three months ended September 30, Uber posted a loss of $0.68 per share, better than the average estimate of $0.81 per share loss analysts surveyed by Yahoo had forecast. Revenue rose 30 percent from a year earlier to $3.81 billion, also beating the average analyst forecast of $3.69 billion.

All this is a step up from the second quarter. For the three-month period ended June 30, Uber posted a loss of $4.32 per share, far below the $3.19 per share loss analysts expected. All told, in the second qaurter, the company lost $5.2 billion.

The Decline of Manufacturing

Here's an indication of how the American economy has changed in recent decades: Once a powerhouse of the U.S. economy, making up about a quarter of GDP in the 1960s, the manufacturing sector has steadily declined in importance, and now represents its smallest share of the U.S. economy in 72 years.

Manufacturing made up 11 percent of gross domestic product in the second quarter, according to figures out from the Commerce Department last week. That's its smallest share in data going back to 1947, and down from 11.1 percent in the prior quarter.

It's also very telling what has replaced manufacturing as the stalwarts of our economy. The 11 percent for manufacturing compares with 13.4 percent for real estate, 12.8 percent for professional and business services and 12.3 percent for governments.

October's Jobs Report

The American economy added 128,000 jobs in October, and the headline unemployment rate ticked up to 3.6 percent, the U.S. Bureau of Labor Statistics reported this morning. Job growth has averaged 167,000 per month thus far in 2019, compared with an average monthly gain of 223,000 in 2018.

There were some headwinds for job numbers in October: The number of Census workers fell by about 20,000, and 20,000 striking workers at GM were also counted as unemployed. Meanwhile, job gains for August and September were revised up by 95,000.  August’s additions were bumped from 168,000 to 219,000 and September’s from 136,000 180,000.

In October, food services and drinking places added 48,000 jobs. Job growth in that industry has averaged 38,000 over the past three months, compared with an average monthly gain of 16,000 in the first seven months of 2019. Employment in financial activities rose by 16,000; the financial industry has added 108,000 jobs over the last 12 months.

What the Fed Rate Cut Means for Investors

Yesterday, the Federal Reserve lowered the federal-funds target rate for the third straight meeting by a quarter percentage point, to between 1.5 percent and 1.75 percent. The Fed also signaled it is likely to pause to see whether these cuts are enough to sustain the economic expansion.

If this is indeed the final cut for a while, it might be very good news for investors. Between 1995 and 1996 and in 1998, the Fed cut interest rates three times and then stopped. In each of these cases the S&P 500 returned 24.76 percent and 19.39, respectively, over the next year.

Historically, the danger for stocks is when the third cut is not the last and the Fed needs to jolt the economy further. In 2001 and 2007, during the dot-com bubble and the financial recession, the Fed cut interest rates three times and kept cutting in order to boost the economy. During those cutting cycles, the S&P 500 had dropped 12.64 percent and a stunning 42.37 percent one year later.

Third Quarter GDP

The Commerce Department said this morning that economic activity in the U.S. grew at an annualized rate of 1.9 percent in the third quarter, down slightly from the 2 percent pace in the second quarter.  Personal consumption spending by American households rose at a 2.9 percent annualized rate while government spending grew at a 2 percent rate.

Foreign trade, on the other hand, was a small drag on the economy. Exports rose 0.7 percent after a big drop in the second quarter, but imports rose somewhat faster than that, at 1.2 percent.

Overall, the numbers show an economy that is continuing to slow at a slight pace. GDP had increased by 3.1 percent in the first quarter of this year, and by 2.9 percent for all of 2018. It is on track to grow by 2.3 percent for all of 2019.

The New Record-Setters

Thanks to a handful of favorable earnings reports, the S&P 500 index rose 0.6 percent yesterday, to close at 3,039, finishing above its previous record of 3,028, set on July 26. The gains were widespread, with the following S&P components all setting new highs at the close yesterday:

• Allegion
• Alphabet Inc.
• Apple
• CDW Corp.
• Charter Communications 
• Dover Corp.
• First Republic Bank
• JPMorgan Chase 
• KLA Corp.
• Lam Research 
• Microsoft 
• Sherwin-Williams 
• United Technologies Corp.
• Xylem 

For Alphabet, Google's parent, the record high was short-lived. After reporting that it missed analysts' earnings estimates, the stock dropped by 2 percent in after-hours trading.

The Changing Face of Retirement

It's a true generational shift: A new Wells Fargo survey of American retirees found that 86 percent live primarily on income from Social Security or a pension. By contrast, only 25 percent of millennial workers expect their primary source of retirement income to come from Social Security or a pension.

Just 5 percent of the retirees say their main source of income is a 401(k), IRA, or other personal savings vehicle. But things are changing fast: 45 percent of millennials say their future retirement will be funded by personal savings. Among baby boomers still working, 22 percent say they'll use personal savings.

Those younger generations are beginning to save for retirement much earlier than those before them. Today's retirees started saving around age 40, on average, while baby boomers still working started around age 36, Gen Xers at age 31, and millennials at age 25.

Amazon Misses

Have we reached peak Amazon? Amazon.com's profit fell for the first time in more than two years in the third quarter, the Internet giant reported yesterday. Moreover, the company expects another earnings decline in the holiday-shopping season.

Amazon reported third-quarter profits of $4.23 a share on sales of $69.98 billion. Sales rose from $56.58 billion a year ago, but earnings declined from $5.75 a share, the first time Amazon earnings have shrunk year-over-year since June 2017.

The company had reported profit of more than $10 billion in 2018, more than triple its previous annual record, and had reported record quarterly profit totals for four consecutive quarters before breaking that streak with its new second-quarter results. Looking to the future, Amazon’s forecast for the holiday quarter came in short of analysts' estimates for both profit and sales.

Saving the Children

According to a new study out yesterday from the Pew Research Center, about six in 10 parents admit they’ve given at least some financial help to their adult children ages 18 to 29 in the past year. That jibes with a recent study by Merrill Lynch, which found that 79 percent of parents say they give some financial support to their adult children.

The Pew study found that the share of young adults who could be considered financially independent from their parents by their early 20s  has gone down in recent years. In 2018, 24 percent of young adults were financially independent by age 22 or younger, compared with 32 percent in 1980.

All in all, nearly three in four parents (72 percent) say that they have put their children’s interests ahead of their own need to save for retirement. About two in three (63 percent) say they have sacrificed their financial security for the sake of their children.

Why Do Older People Stay on the Job?

A third of older people are still hard at work, with 45 percent putting in full-time hours on the job and 55 percent working part time. A new study from Provision Living asked seniors 65 and older why they’re still laboring away in the workforce, when they could be enjoying the fruits of retirement after years of employment.

According to the respondents, 62 percent say they’re still on the job for financial reasons, while 38 percent cite personal reasons for sticking with the nine-to-five. The average retirement savings among those working seniors is a pretty clear indication why they can't afford to retire; it’s just $133,108.

Of the group that said they work for financial reasons, 37 percent say they simply can’t afford to retire. Another 23 percent say they’re supporting family, 19 percent are paying off debt, 13 percent are paying off a mortgage, 4 percent are saving up for a big expense and 3 percent have some other reason.

The Incredible Shrinking Trade Volume

The major stock market indexes are nearing their all-time highs. But surprisingly enough, not many issues are trading hands. Trading volume is lower than it's been in a long time.

In fact, average daily trading volume in S&P 500 stocks over the previous 90 days is nearing a 10-year low. It declined to just 7 percent of total market capitalization during the three months that ended at the end of last week. By contrast, it averaged 21 percent between 2010 and 2013.

One factor is that trades aren't nearly as large as they used to be. Data from ModerIR shows that the average number of shares per trade has fallen from 248 in 2015 to  just 133 today.

The Easy Earnings Beat

So far, more than 14 percent of S&P 500 companies have reported results for this earnings season. Of those companies, 81 percent have posted earnings that beat analyst expectations.

That's the good news. The bad news is how low the bar has been for success: Analysts polled by FactSet expected third-quarter earnings to have fallen by 4.6 percent.

We'll know a lot more this week, when about 120 S&P 500 companies, or around 24 percent, are scheduled to release their quarterly results. Among the big names reporting this week: Amazon, Intel, McDonald’s, Chipotle Mexican Grill, Caterpillar and Boeing.

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.

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.

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.

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.

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

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.

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.

A Lack of Retirement Info

Does your employer help you much with your retirement planning? Transamerica Center for Retirement Studies' 19th annual retirement survey found that while 64 percent of workers overall are confident they will be able to retire with a comfortable lifestyle, only 18 percent are “very confident.”

That may be, in part, because plan sponsors don't do enough to assist their employees with retirement transition. The organization found that few plan sponsors provide things like:

• Educational resources (30 percent)
• Information about distribution options (28 percent) 
• Retirement planning materials (25 percent) 

Moreover, 22 percent of plan sponsors say they do “nothing” to help employees transition their savings and finances into retirement, with 26 percent of small companies saying this compared with only 7 percent of both medium and large companies.

The Secret of Utilities

Through the first three quarters of 2019, which ended last week, the top-performing sector was information technology, which returned 30.3 percent. It was followed by real estate at 28.4 percent and utilities at 25.0 percent.

But if you zoom out a little further, to the 12 months that ended on September 30, the top performer was the usually sleepy utilities sector. It's returned 27.1 percent over the past year, outpacing real estate, at 24.5 percent, and consumer staples, at 16.6 percent.

Why have utilities been so strong? Along with real estate, utilities are considered a strong play when bond returns are low. Utilities and real estate are generally considered dividend-income investments. As the yield on 10-year U.S. Treasury notes has declined from 3.05 percent to 1.59 percent, utilities have thrived.

September Jobs Report

The headline unemployment rate dropped to 3.5 percent in September, matching a level it last saw in December 1969, the Labor Department reported this morning This happened even though the economy added just 136,000 jobs for the month, the slowest pace of job growth in four months.

One reason for this anomaly is that the previous two months saw upward revisions in jobs created. August rose sharply, from an initial estimate of 130,000 to 168,000, while July increased from 159,000 to 166,000, for a total net gain of 45,000.

The bulk of the hiring in September was concentrated in the services sector. Education and health care providers added 40,000 positions. Government added 22,000 workers in September, with only 1,000 of the jobs being due to temporary federal hiring for the 2020 Census.

Selling but Not Buying

There's a strange phenomenon in the stock market right now: Corporate share sales have surged to a  four and a half year high at the same time corporate buying has dropped.

Corporate executives unloaded $14.2 billion worth of their companies’ stock last month through September 26, according to a TrimTabs analysis. That’s the highest of any September in the past 10 years. September also marked the sixth month this year that insider selling has topped $10 billion, which is already the most months to cross that threshold since 2006.

Meanwhile, overall corporate demand for shares, in the form of stock buybacks and cash mergers and acquisitions, has dropped. Share repurchase volume was $145.9 billion in the third quarter, just a little over half the $281 billion worth of stock repurchased in the second quarter. It was the lowest quarterly total since the third quarter of 2017.

Manufacturing Takes a Step Back

Worrisome news from the manufacturing sector: The U.S. manufacturing purchasing managers’ index from the Institute for Supply Management came in at 47.8 percent in September, its lowest level since June 2009. Any figure below 50 percent signals a contraction.

The new export orders index was only 41 percent, its lowest level since March 2009. The ISM employment gauge for the sector showed its lowest reading since January 2016. New orders, backlog, raw materials, inventories, exports and imports also contracted across the board last month.

The sector had contracted for the first time in more than three years in August. That ended a 35-month expansion period where the PMI averaged 56.5 percent, according to ISM.

Low-Tech Security Issues

We're all worried about being the victim of a data breach - having a credit card or Social Security number stolen by a hacker. But a new report out from the information security service Shred-It notes that we need to pay attention to low-tech protection as well.

The report said that common workplace occurrences may be the cause of many security breaches. It found that 65 percent of managers expressed concern that their employees or contractors had printed and left behind a document that could lead to a data breach.

Seven in 10 managers said they had seen or picked up confidential documents left in a printer, and more than three in four managers admitted that they had inadvertently sent an email containing sensitive information to the wrong person. And 88 percent reported having received an email containing sensitive information they were not intended to receive from someone within or outside of their organization.

A Blah Third Quarter

The third quarter of 2019 comes to a close today, and it’s been a pretty blah quarter for most of the market indexes. After a very strong start to the year, the last three months have seen little movement in the markets.

For the third quarter, the S&P 500 is on track for a 1.1 percent gain, after rising 3.8 percent in the second quarter and 13 percent in the first quarter. The Dow also rose 1.1 percent in the third quarter, after rising 2.6 percent in the second and 11 percent in the first. The Nasdaq had the biggest reversal, falling 0.4 percent between July and September, compared with a 3.6 percent increase in the second quarter and a 16.5 percent rally in the first.

But don’t lose sight of the bigger picture. The S&P 500 is up 18.6 percent on the year; the Dow Jones industrial average is up 15.4 percent, and the Nasdaq is up 20 percent.

Falling Off the 500

What does it take to get dropped from the S&P 500? S&P Dow Jones Indices announced late yesterday that it was booting Nektar Therapeutics, which has been testing a treatment for breast cancer, from the S&P 500 index. Nektar was the worst performing stock on the index in the past 12 months, dropping more than 70 percent.

Nektar's earnings fell 112 percent in the second quarter. How do you lose more than 100 percent of your earnings? The company had recorded earnings of $5.33 per share in the year-ago period, thanks to a billion-dollar payment from Bristol-Myers. But that turned into a loss of 63 cents per share for the second quarter of 2019.

More recently, Nektar tested a combination of its drug, NKTR-214, with Bristol-Myers' Opdivo in breast cancer patients. Across 38 patients who could be evaluated, just five responded. As a result, Nektar stock fell 6.6 percent in one day yesterday - and S&P took its action.

Where Do You Work?

Do you leave home and go to work every morning? The option to work from home has become an increasingly desired perk for a lot of employees. In 2017, a Gallup poll found that 43 percent of Americans worked remotely “at least sometimes.”

The next wave in this: Working from anywhere (WFA), in which workers can live and work wherever they choose, whether it be in the U.S. or even a different country. A new study shows that work from anywhere may even help people delay retirement.

In a study of U.S. patent examiners, the researchers noted that workers “who had been on the job longer — that is, those older and closer to retirement age — were more likely to move to retirement-friendly coastal areas of Florida and Texas than their lower-tenured peers.” The research suggests that offering a WFA policy could end up encouraging valued senior employees to remain in the workforce longer.

The Latest Consumer Report

September's consumer confidence report posted the biggest drop since the start of the year, as Americans’ expectations for the economy and the job market deteriorated. Both the present situation and expectations gauges declined, with the latter dropping to the lowest level since January.

Some of the findings:

• Confidence among those earning $125,000 or more a year suffered the largest one-month decline since April 2015.
• The share of consumers who see business conditions getting worse six months from now climbed to the highest level since November 2013.
• The share of those respondents who say incomes will increase six months from now dropped from 25 percent to 19 percent, the lowest since January.
• Buying plans for motor vehicles, homes and major appliances also declined in September.

The Key to Long-Term Savings

What's the best way to save money over the long haul? Housing is the biggest part of most Americans’ budgets; the average American household spends a total of roughly $60,000 per year; nearly $20,000 of that spending is on housing, government data shows.

And now, new research from TD Ameritrade — which looks at people who save 20 percent or more of their incomes, called “super savers” — shows that the single biggest difference between what super savers spent less on was housing. Super savers spent just 14 percent of their incomes on housing, while regular folks dropped 23 percent.

What’s more, research released this week by the Principal found that more than four in 10 people who fully funded or were very close to fully funding their 401(k)s said that one of the sacrifices they made to save so much was that they lived in a modest home.

Defining the Upper Class

Do you define yourself as "upper income"? According to a 2018 report from the Pew Research Center, 19 percent of American adults live in “upper-income households.” The median income of that group was $187,872 in 2016.

Pew defines the upper class as adults whose annual household income is more than double the national median. That’s after incomes have been adjusted for household size, since smaller households require less money to support the same lifestyle as larger ones.

Here’s the minimum amount you’d have to earn each year to be considered upper-class, depending on the size of your household:

• Household of one: Minimum of $78,281 
• Household of two: Minimum of $110,706
• Household of three: Minimum of $135,586 
• Household of four: Minimum of $156,561
• Household of five: Minimum of $175,041 

Working Past 65

Are you planning to stop working at age 65? That may be a thing of the past. According to Northwestern Mutual’s new 2019 Planning & Progress Study, 46 percent of Americans expect to work past the traditional retirement age of 65.

On the positive side, 53 percent of Americans who said they expect to work past the age of 65 have noted that it will be by choice. This is slightly higher than the 47 percent who reported they expect to beyond retirement age out of necessity.

Why keep working? These are the most popular answers:

• 58 percent believe they will still enjoy their career by age 65 and wish to continue.
• 46 percent believe they will want additional disposable income.
• 39 percent believe working is a social outlet that will help them stay active and prevent boredom.

The Future of Rate Cuts

As was widely expected, the Federal Reserve reduced its benchmark short-term rate to a range between 1.75 percent and 2 percent yesterday afternoon. That’s the second rate cut in as many months.

The big question now is if there will be another rate cut this year. Seven Fed officials said they believed there would be one more rate cut this year, while five indicated they thought this move would be the year’s last.  So they're nearly evenly split.

Five more members thought no move was needed after July, including at Wednesday’s meeting. While the seven who see another easing yet this year is not a majority, it is a sizable block.

The Economy's Mixed Signals

The risk of a global recession is at its highest since August 2009, according to the new Bank of America Merrill Lynch Fund Manager Survey for September. Some 38 percent of investors polled expect a recession over the next year. That figure was 34 percent in its August survey, which had been the highest response since October 2011.

But the same survey showed fund managers are buying America more than they have in over a year. Allocation to U.S. equities soared 15 percentage points to a net 17 percent overweight, the biggest monthly increase since June 2018.

On top of that, the Federal Reserve said yesterday that manufacturing production rose 0.6 percent last month, following  on the heels of a drop of 0.4 percent in July. Manufacturing accounts for about 11 percent of the U.S. economy,

Is the Oil Shock Good for Stocks?

Oil futures on Monday marked the sharpest daily rise in more than a decade after a weekend attack on major crude facilities in Saudi Arabia threatened to create a supply crunch. West Texas Intermediate crude gained 14.7 percent, to $62.90 a barrel, representing the largest daily gain since September 22, 2008.

But that might be good news for stocks. History shows that past oil shocks haven’t always caused much harm to stocks. While one-day crude-oil price jumps of more than 10 percent are usually accompanied by market losses on the same day, they have been, on average, followed by better-than-usual performance six months out, according to Dow Jones Market Data.

The S&P 500 has, on average, risen 10.2 percent in the six months following one-day, crude-oil price spikes of 10 percent or more, nearly 4 percentage points higher than the 6.3 percent average growth of the S&P 500 during other periods. The Dow has risen 8.7 percent six months after a 10 percent crude surge, versus a typical 6.1 percent rise, while the Nasdaq has seen a 15.5 percent rise compared with a typical 8.2 percent rise.

The Shock to Oil Prices

Are we headed for an oil shock? Oil prices soared last night after a drone strike disrupted Saudi Arabia's oil facilities, leading to a possible disruption of the world's supply of crude. The attacks knocked out more than half of Saudi oil output, or more than 5 percent of global supply.

U.S. crude futures jumped as much as 15 percent before settling back at around an 11 percent increase. Brent crude, the benchmark used in European oil markets, rose by 18 percent before trading up about 12 percent.

Gasoline futures were also up 11 percent, according to market data source Refinitiv. That would counteract a long-term trend: The average U.S. price of regular-grade gasoline has dropped 3 cents per gallon over the past three weeks to $2.63, and is 20 cents lower than what it was in mid-July.

The Latest Inflation Reading

The core consumer price index rose 0.3 percent in August and was up 2.4 percent from a year earlier, the Labor Department said yesterday. While those figures are unexceptional, the more important news was the rise in medical costs.

August saw the biggest monthly rise in medical-care costs since 2016 as well as record increases in health-insurance prices. There was a 1.9 percent monthly rise - and an 18.6 percent annual increase  - in health-insurance prices, along with increases in hospital services and nonprescription drugs.

Also driving the core inflation gain were used-car prices, up 1.1 percent for a third straight increase, while shelter costs, which make up about a third of total CPI, rose 0.2 percent from the prior month. Energy prices fell 1.9 percent from the prior month as gasoline dropped 3.5 percent, but apparel was up 0.2 percent.

Small Caps Make a Comeback

This has been a rough year, comparatively speaking, for small-cap stocks, but they may be making a comeback. The benchmark small-cap Russell 2000 index has far outperformed both the Dow Jones Industrial Average and the S&P 500 index this week.

The Russell 2000 has gained 4.6 percent so far this week and rose at least 1 percent in three consecutive sessions. That may not sound like much, but it is its first time doing so since last January.

More significantly, the Russell’s weekly gain marked a 3.81 percentage-point spread between its increase and that of the S&P 500. If that holds, it would mark the widest margin of underperformance between the large-cap index and the Russell on a weekly basis since November of 2016.

Signs of Cooling in Housing

Even though mortgage rates are around the lowest they've been in three years, buyers are suddenly much more cautious about purchasing a home. Competition is cooling, and consequently sellers can no longer command any price.

Consumer sentiment in housing did improve in August, according to a monthly survey from Fannie Mae. But that's only because of a big jump in the share of those who think mortgage rates are going to continue to fall. There are other signs that the housing market is cooling.

For instance, just more than 10 percent of offers written by Redfin in August faced a bidding war, according to the brokerage’s monthly survey. That is down from 42 percent a year ago. The supply of homes for sale is growing in the midrange and higher end, but it is still tight at the entry level.

The Decline of Younger Workers

Young people just aren't working these days. Between 2000 and 2018, the workforce participation rate for ages 16 to 19 fell from about one half of the population to one third, according to a new study from the Brookings Institution. The participation rate for ages 20 to 24 dropped from almost 80 percent to about 71 percent,

The drop in younger workers will continue into 2028, according to Bureau of Labor Statistics projections. The labor force participation rate for the 16- to 24-year-old age group is projected to shrink by 3.5 percent from 2018 to 2028, the agency said.

As a result, just over half of the young working population (51.7 percent) will be part of the workforce by 2028. That’s a 14 percent drop from the rate in 1998, when almost 66 percent of the 16- to 24-year old demographic had a job or was looking for one. It remains to be seen what effects these drops will have on our economy - and our society.

Stranded in Newark

If you’re flying out of Newark Liberty International Airport anytime soon, you may want to bring an extra book to read. According to a new study, our local airport ranked as the worst in the U.S. for having the highest share of flights that were delayed for over 15 minutes or cancelled. The air-passenger rights company AirHelp found that only 64 percent of flights departed Newark on time.

Passengers won’t do much better flying out of other New York City-area airports. LaGuardia’s on-time performance rate was only 66 percent, third-worst in the nation, and JFK came in at No. 8, with almost 74 percent of its flights leaving on time.

This comes on the heels of last month's study showing Newark airport at the top of security wait times across the country. The average TSA wait time at Newark Liberty is 23 minutes.

August's Jobs Report

The economy added just 130,000 new jobs in August, marking the smallest increase in three months, according to figures released by the Bureau of Labor Statistics this morning. Removing the temporary workers hired for the U.S. Census, the private sector added around 100,000 jobs last month. The headline unemployment rate was unchanged at 3.7 percent.

The federal government added 28,000 jobs last month, mostly temporary workers hired to help prepare the census that takes place every ten years. Professional and business services led the way in hiring by adding 37,00 new jobs; health-care added 24,000, and financial companies 15,000. But retailers and energy companies cut jobs.

One caveat: The government tends to undershoot its August jobs number. With so many people on vacation, the number of respondents to the government’s monthly questionnaire is often the lowest of the year. As more responses are returned, the government usually ends up revising job growth higher.

The Latest From the Beige Book

The Fed's latest Beige Book, compiling on-the-spot reports from around the country, suggests that the economy continued to expand at a modest pace through the end of August. Coverage of New Jersey's economy is split between the Fed's New York City and Philadelphia offices, so those are the reports that are of the most concern to us.

In New York, the labor market has remained very tight, with businesses reporting trouble finding qualified workers in a wide variety of roles, including engineers, teachers, construction workers, truck drivers, and retail clerks. Tourism has picked up noticeably, and banks reported a rebound in loan demand, though the financial sector overall showed signs of softening.

In Philadelphia, malls and convenience stores continued to report modest growth in retail sales. Some mall store operators reported modest increases in year-over-year sales and foot traffic. Tourism activity continued to grow at a modest pace; one contact noted that the Jersey shore season has been fine, with high occupancy, that restaurants and other retail are performing well, and that casino revenues in Atlantic City were up.

Cracks in Manufacturing

Are there serious problems in manufacturing? Yesterday, the Institute for Supply Management reported that its manufacturing index fell from 51.2 percent in July to 49.1 percent in August. Any reading below 50 percent indicates a contraction in activity.

August's mark is the lowest reading for this index since January 2016. The ISM Manufacturing Index has now declined for five straight months.

The new orders index fell to 47.2 percent and the production index fell to 49.5 percent. Only nine of the 18 manufacturing industries reported growth in August and only three reported gains in new orders. The ISM also noted “a notable decrease in business confidence” in August.

Summer's End

Now that we're past Labor Day, not only is summer coming to an end, but there's downbeat news for investors as well: September is, on average, the worst month for stock prices. Since 1937, the average September performance of the S&P 500 index and the Dow Jones Industrial Average is a 1 percent decline, while the Nasdaq Composite Index has seen an average fall of 0.5 percent, according to Dow Jones Market Data.

Such performance wouldn’t be welcome news for equity market investors, who just suffered through a 1.7 percent August decline for the Dow, a 1.8 percent loss for the S&P and a 2.6 percent drop for the Nasdaq. These are the worst August performances for all three benchmarks since 2015.

It’s not all bad news, however. According to an analysis by LPL Financial, the past 15 times that the S&P 500 lost ground in August, the rest of the year saw positive returns every single time.

Thoughts for Labor Day

“No work is insignificant. All labor that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence.”  ~ Martin Luther King, Jr.

“Without ambition one starts nothing. Without work one finishes nothing. The prize will not be sent to you. You have to win it.” ~ Ralph Waldo Emerson

"One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man." ~ Elbert Hubbard

GDP Estimates Slow a Touch

The U.S. economy slowed a bit more than initially thought in the second quarter, the Commerce Department reported yesterday. The strongest growth in consumer spending in four and a half years was offset by declining exports and a smaller inventory build.

Gross domestic product increased at a 2.0 percent annualized rate, the Commerce Department said in its second reading of second-quarter GDP, revised down from the 2.1 percent pace estimated last month. The economy grew at a 3.1 percent rate in the first quarter of this year. Altogether, it expanded 2.6 percent in the first half of the year.

The brightest spot in the second quarter: Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, surged at a 4.7 percent rate. That was the fastest since the fourth quarter of 2014 and was a slight upward revision from the 4.3 percent pace estimated last month.

The Rich Aren't Spending

The rich have cut their spending on everything from homes to jewelry, leading some to wonder if the wealthiest Americans are beginning to fear a recession. From real estate and retail stores to classic cars and art, the weakest segment of the American economy right now is the very top.

Luxury real estate is having its worst year since the financial crisis, with Manhattan seeing six straight quarters of sales declines. According to Redfin, sales of homes priced at $1.5 million or more fell 5 percent in the U.S. in the second quarter.

Retailers to the 1 percent are faring the worst, with Barney’s filing for bankruptcy and Nordstrom posting three consecutive quarterly declines in revenue. At this month’s massive Pebble Beach car auctions, less than half of the cars offered for $1 million or more were able to sell. And in the first half of 2019, art auction sales were down for the first time in years. Sales at Sotheby’s dropped 10 percent, and Christie’s auction sales were down 22 percent from a year ago.

A Lifetime of Jobs

How many jobs have you had in your life?  According to a new report out from the Bureau of Labor Statistics, Americans born from 1957 to 1964 held an average of 12.3 jobs from ages 18 to 52. These baby boomers held an average of 5.7 jobs between the ages 18 and 24, or nearly one a year.

The average fell to 4.5 jobs from ages 25 to 34, to 2.9 jobs from ages 35 to 44, and to 1.9 jobs from ages 45 to 52. In other words, the trajectory was that as the worker gets older, he or she holds on to each job for significantly longer.

Although job duration tended to be longer the older a worker was when starting the job, these baby boomers continued to have large numbers of short-duration jobs. Among jobs started by 35- to 44-year-olds, 36 percent ended in less than a year, and 75 percent ended in fewer than five years.

Investors Are Getting Shaky

U.S. investor optimism sunk to the lowest level since the fourth quarter of 2016 following the market volatility seen at the start of this month, according to a new survey from Wells Fargo. Confidence among American investors weakened in the 12-month outlook for the stock market and U.S. employment.

The third quarter Wells Fargo/Gallup Investor and Retirement Optimism Index was down 13 points from 85 in the second quarter and far below the post-recession high of 117 reached in the fourth quarter of 2017. This was the largest quarterly drop for the index in over three years.

Investor optimism dropped this quarter across all four components of the index: investors’ 12-month outlook for the stock market, 12-month outlook for unemployment, optimism about unemployment, and inflation. The percentage of investors who said now was a good time to invest in the market fell to 59 percent this quarter from 65 percent in the prior quarter.

Trouble in the Small Caps

Despite an overall solid year for the markets, the small-cap asset class remains a problem child. The Russell 2000 index, which tracks companies with a median market capitalization of $784 million, remains 13 percent below the record high it set last August.

What's more, companies in the index appear mired in an earnings recession. The small-cap sector's profits fell by double digits in the first quarter and look set to fall by 9 percent in the second, according to an analysis Bank of America.

On top of that, debt levels reached an all-time high for the Russell 2000 in the first quarter of 2019, according to an analysis by RBC. Some experts say that this rising debt is masking even an worse performance among small-cap companies than shown by the anemic 2019 earnings level.

Retirement Millionaires

Here's some strong news from the world of retirement savings. According to Fidelity, the number of 401(k) and IRA millionaires hit a record high at the end of the second quarter.

The number of people with $1 million or more in their 401(k) increased to a record 196,000, up from 180,000 at the end of the first quarter. Meanwhile, the number of IRA millionaires increased to 179,700, also a record high and an increase from 168,100 in the previous quarter.

On top of that, employee savings rates hit a record high, after 32 percent of savers increased their contributions in the second quarter of this year. Now, the average employee contribution rate is 8.8 percent, which is nearly a full percentage point higher than a decade ago.

America's Indebtedness Problem

Americans aren't paying off their credit card bills. U.S. credit card balances grew to $868 billion in the second quarter, from $848 billion in the previous three months. That's according to a new report from the Federal Reserve Bank of New York.

Even worse, the proportion of those balances seriously past due is on the rise. Payments on about 5.2 percent of those balances were 90 days overdue in the latest quarter, up from 5.0 percent in the first quarter. The figure has been increasing continuously since 2017.

Credit card debt is the only major area of indebtedness, though, where people are losing ground. Delinquency rates declined for auto loans, home equity lines of credit, mortgages and other debt categories.

New Jersey's Dropping Unemployment Rate

Here's some more good news about our state: The Bureau of Labor Statistics reported that New Jersey's unemployment rate dropped by 0.7 percent from July 2018 to July, falling from 4.0 percent to 3.3 percent. That's the largest drop for any of the 50 states over the past year.

New Jersey's current unemployment rate is the lowest for the state since these figures were first compiled, back in 1976. We were also one of only six states that saw the jobless rate decline in July of this year.

All told, there are currently 4.202 million employed persons in New Jersey, according to the BLS. That's up from 4.154 million jobs in the state a year ago.

Mortgages Go Negative

The latest news from the world of falling interest rates: A bank in Denmark is offering borrowers mortgages at a negative interest rate. It's effectively paying its customers to borrow money for a house purchase.

Jyske Bank, Denmark's third-largest bank, said this week that customers would now be able to take out a 10-year fixed-rate mortgage with an interest rate of  minus 0.5 percent, meaning customers will pay back less than the amount they borrowed. If you bought a house for $1 million and paid off your mortgage in full in 10 years, you would pay the bank back only $995,000.

Financial markets are in a volatile, uncertain spot right now, particularly in Europe. As such, some banks are willing to lend money at negative rates, accepting a small loss rather than risking a bigger loss by lending money at higher rates that customers cannot meet.

A Strong July for Retail

Some good news to offset the fear of the yield curve going inverted: U.S. consumers spent more at retail stores and restaurants in July, the Commerce Department said yesterday. Retail sales rose a healthy 0.7 percent last month, following a 0.3 percent gain in June. Online retailers, grocery stores, clothing retailers and electronics and appliance stores all reported strong gains.

Sales soared 2.8 percent at internet retailers, a gain that may have been tied to Amazon Prime Day and competing sales from rivals. But it wasn’t just internet retailers: Sales also rose sharply at department stores, restaurants and electronics outlets.

Some other risers: Grocery and beverage stores were up 4 percent year-over-year; general merchandise stores were up 2.1 percent; and furniture and home furnishings stores were up 2 percent.

That Scary Yield Curve

The infamous yield curve - the spread between the 2-year Treasury note yield and the 10-year -inverted yesterday morning for the first time in over a decade. This is widely considered a signal of an upcoming economic recession, but that doesn’t have to mean doom and gloom for stock investors.

The Dow had its biggest one-day drop of the year yesterday; it and the S&P 500 both fell by about 3 percent. But over the past few decades, an inversion hasn't always translated to a lasting selloff in equity markets.

On average, since 1978, the S&P 500 has returned 2.5 percent after a yield-curve inversion in the three months afterward. Over the longer term,13.48 percent a year after, 14.73 percent in the following two years, and 16.41 percent three years out, according to Dow Jones Market Data

What's Driving Inflation

Inflation continues to creep upward. The Labor Department said yesterday morning that the Consumer Price Index rose 0.3 percent last month, lifted by gains in the cost of energy products and a range of other goods.

In July, energy prices overall increased 1.3 percent after falling 2.3 percent the month before. The biggest driver came at the gas pump, where prices rebounded 2.5 percent after dropping 3.6 percent in June. Nevertheless, gas prices still remain 3.3 percent lower than a year ago.

Other costs contributed to the rise as well. Electricity rose 0.6 percent, while shelter costs increased 0.3 percent. Food prices were unchanged for a second straight month, and food consumed at home slipped 0.1 percent.

The Bond Market's Warning

The moves in the bond market today shed some light about the state of the economy. The yield on the 10-year Treasury note fell 9.1 basis points to 1.640 percent. That's its lowest level since October 2016.

Remember, bond yields move inversely to their prices, so when demand for them goes up, the yield that they have to offer goes down. Increasing demand for safe assets like Treasurys could be indicating a flight to safety on the part of investors.

In addition, the spread between 2-year and 10-year Treasury yields narrowed to about only 5 basis points yesterday, near its lowest level since 2007. If the 10-year yield looks falls below the 2-year note yield, an inversion is typically a recession warning.

Retirement Confidence vs. Retirement Reality

How much money will you need for a comfortable retirement? On average, Americans believe they need $1.7 million to retire, according to a recent survey from Charles Schwab.

According to another study, this one by the Employee Benefit Research Institute, two-thirds of U.S. workers said they are very or somewhat confident they’ll be able to live comfortably throughout retirement. But confidence doesn't always comport with the reality of the situation.

The good news is that 401(k) balances are near all-time highs, and in the last decade, the average 401(k) retirement plan balance rose by 466 percent. At the same time, that balance is roughly $297,700 - well short of $1.7 million.

Boomers Take Care

Here's some comforting family news: Nine in 10 baby boomers who expect to be caregivers say they would be willing to make significant lifestyle changes in order to care for a family member or loved one. That's according to a new study from the Bankers Life Center for a Secure Retirement.

Study participants said they would be willing to do these things to provide care for a loved one:

• Reduce spending: 66 percent
• Travel less: 41 percent
• Move to a new home: 27 percent
• Work less: 27 percent
• Stop working altogether: 19 percent

The study also found that 45 percent of boomers believed they would need long-term care at some point, up from 36 percent in 2013. Sixty-six percent reported that they had had detailed conversations about how they wanted to receive long-term care, and 55 percent had had detailed conversations about how to pay for care.

Bankruptcy Takes Its Toll

Here's a sobering economic signal: In the first seven months of the year, U.S.-based companies announced 42,937 job cuts due to bankruptcy, according to a new report from outplacement and business coaching firm Challenger, Gray & Christmas. That's up 40 percent from the same period last year and nearly 20 percent higher than all bankruptcy-related job losses last year.

That is the highest seven-month total since 2009, when 50,258 cuts due to bankruptcy were announced. In fact, it is higher than the annual totals for bankruptcy cuts every year since 2009.

Companies cited bankruptcy as the reason for 11.6 percent of all job cuts announced from January to July. That’s compared to 11.3 percent of all cuts for the same period in 2018. Since 2007, bankruptcy has accounted for approximately 6 percent of all job cuts every year.

Investment Views of the Ultra-Wealthy

Some ultra-wealthy investors have begun trimming their stock positions a bit, according to the latest from TIGER 21. Short for The Investment Group for Enhanced Results in the 21st Century, that's a investment club of about 700 people with at least $10 million to invest.

Members of TIGER 21 reduced their stock allocation to 21 percent from 22 percent during the second quarter, according to the group’s quarterly report. These investors continue to maintain a 12 percent allocation in cash and cash equivalents.

What are they excited about? Real estate. TIGER 21 members have stepped up their investments in real estate for the first time in three quarters, with it now accounting for 28 percent of their holdings, up from 26 percent in the first quarter.

The S&P's Rout

Worries about a looming trade war with China resulted in the worst day for the markets all year yesterday. The S&P 500 finished down by nearly 3 percent on the day—the biggest one-day drop for the index this year.

All 11 of the S&P's sectors declined, led by a 4.2 percent drop for the tech sector.  The S&P 500 is now down 4.6 percent in the last five days, and is off 6 percent from its July 26 high.

The carnage was so thorough that only 11 stocks in the S&P 500 closed higher. Some of the more notable names in that group included Tyson Foods, Abiomed, and Newmont Goldcorp.

The Equifax Fallout

A while back, Equifax – the credit rating agency that was victimized by a data breach in 2017 – announced that everyone affected could get $125 as part of a settlement with the Federal Trade Commission. Let’s hope you didn’t spend that money, because last week, the FTC announced that, due to an overwhelming response, cash payments aren’t going to be anywhere near $125 each.

About 147 million people were affected by the Equifax breach, but only $31 million was set aside for payments as part of the $700 million settlement. For everyone to have gotten $125 from that pot, there would have to be only 248,000 claimants. While the FTC didn’t give a number, they said there were already “an enormous number of claims filed.”

The FTC is now recommending that you instead take four years of free credit monitoring and identity protection. This is available not only from Equifax but from its two fellow major credit bureaus, Experian and TransUnion.

July's Jobs Report

The Labor Department reported this morning that the economy added 164,000 jobs during the month of July, which is almost exactly the average monthly gain for the year. The headline unemployment rate remained unchanged at 3.7 percent.

The bad news: Job gains for the two previous months were revised downward by a total of 41,000. Over the past three months, monthly job growth has averaged about 140,000 — down from 233,000 in the final three months of 2018.

On the other hand, an influx of 370,000 new workers to the labor force brought the labor participation rate up to 63 percent, its highest since March. The total labor force of 163.4 million Americans set a new record high.

What the Rate Cut Means

As expected, the Federal Reserve yesterday cut its benchmark interest rate by a quarter percentage point. But the stock the market didn't react well, apparently because Fed chair Jerome Powell refrained from suggesting further rate cuts were on the way.

Following the announcement, the Dow Jones Industrial Average closed down 1.2 percent, marking its biggest one-day fall since May 31. The S&P 500 dropped 1.1 percent.

On the other hand, history shows the market usually responds more positively to a rate cut. Since 1990, the S&P 500 has gained on average 0.16 percent on the day of a 25-basis-point cut. One month later, the S&P is an average of 0.57 percent higher.

The GDP Outlook from the Business Sector

The economic expansion will continue but growth will slow over the next 12 months, if you put stock in the latest Business Conditions Survey just out from the National Association for Business Economics. Less than half of respondents to the survey expect GDP growth to rise by more than 2 percent over the next four quarters — down from 53 percent who said so in April, and 67 percent who said so in January.

U.S. GDP rose 2.1 percent in the second quarter, according to data released by the Commerce Department last week, That was down from 3.1 percent in the first quarter and comes on the heels of 2.5 percent growth for all of 2018.

The Business Conditions Survey also suggested that the job market may be cooling slightly. One third of respondents said that they had hired during the second quarter, down from 44 percent who had said so a year earlier. And just under one third said they expected to hire in the next three months, down from 41 percent a year ago.

Those Incredible Buybacks

Companies in the S&P 500 index are returning cash to their shareholders at a historic rates, according to a new report from Goldman Sachs. In the 12 months ended March 31, firms in the S&P 500 index  spent 103.8 percent of their free cash flow on stock buybacks and dividends, up from 101.9 percent in the fourth quarter of last year.

This is the first time that the S&P companies have spent more cash than they earned on payouts since the period between September 2006 and March of 2008. At that time, there was a seven-quarter stretch during which S&P 500 companies paid out more to shareholders than they earned in cash.

Not surprisingly, these corporations now have a lot less cash on hand. Overall, during the past year, nonfinancial companies in the S&P 500 have seen their cash levels decline by $272 billion, a 15 percent decline that represents the largest drop since at least 1980.

Winner Take All?

Is the stock market “winner take all”? Just 1.3 percent of the world’s public companies account for all the market gains during the past three decades, according to a new study from a professor at Arizona State’s Business School. Outside the U.S., the gains are even more concentrated, with less than 1 percent of all equities driving all of the net appreciation in share prices.

From 1990 to 2018, just five companies - Apple, Microsoft, Amazon.Com, Alphabet Inc. (Google) and Exxon Mobil - accounted for 8.3 percent of global net wealth creation. But those five companies account for just 0.008 percent of the total sample set of 62,000 publicly traded companies.

During that 1990-2018 period, the best-performing 811 companies accounted for the entire net stock market appreciation of $44.7 trillion (in excess of the returns you could get from Treasury bills).  Meanwhile, a majority of stocks - 37,195, or 60.9 percent - were net money losers, subtracting a $21.83 trillion from the total.

Second Quarter GDP Report

Growth decelerated in the second quarter as tariffs and a global slowdown weighed on the U.S. economy, the Commerce Department reported this morning. GDP increased by 2.1 percent in the quarter, down from 3.1 percent in the first quarter.

The biggest factors driving growth last quarter: Personal consumption expenditures rose 4.3 percent, the strongest performance since the fourth quarter of 2017. Government consumption expenditures and gross investment rose 5 percent, the fastest pace since the second quarter of 2009. At the same time, gross private domestic investment tumbled 5.5 percent, the worst since the fourth quarter of 2015.

This morning's report also featured revisions for the past five years. Updated government figures show that GDP expanded 2.5 percent on a fourth-quarter-over-fourth-quarter basis last year, down from the previous estimate of 3 percent .

Tesla's Crash

One of the biggest casualties of this week's earnings report: The electric-car maker Tesla. The Wall Street consenus had the ecletric-car maker losing 40 cents per share this quarter. Instead, it lost nearly three times as much, $1.12 per share.

That's a big miss, resulting in the stock losing 10 percent of its value in a single day. But on the other hand, Tesla had lost $3.06 per share during the same period last year. So the company is at least losing less money now.

But there was also some good news from Tesla. It reaffirmed its guidance for full-year delivery, saying it still expects to sell 360,000 to 400,000 vehicles this year, mostly Model 3s.

Rumblings in the Housing Market

Sales of previously owned homes slipped 1.7 percent in June, reflecting ongoing weakness in the U.S. housing market despite a sharp drop in mortgage rates. Existing-home sales sold at a 5.27 million annual pace last month, down from 5.36 million in May, the National Association of Realtors said yesterday.

A 30-year fixed-rate mortgage averaged 3.8 percent in June vs. almost 5 percent last November. But even after that big drop in mortgage rates, sales of previously owned homes are 2.2 percent lower than a year ago.

On the other hand, the median selling price in June rose 4.3 percent to $285,700 from a year earlier. That means that home prices have now risen in every month for more than seven years.

The Problems of Newlyweds

Is someone you know planning to get married? Here’s a little cautionary warning you can give them: Most engaged couples and newlyweds don’t talk about money on a regular basis, according to the findings of a new survey by Northwestern Mutual and wedding planning and registry specialist The Knot.

Only 37 percent of newlyweds and engaged couples talk about their finances monthly. While being on the same page financially is critical to a happy, long-lasting marriage, 72 percent of those surveyed do not have a clear plan when it comes to saving for their passions.

The ironic thing is that 82 percent of couples feel closer to their partners when they’re in agreement about money. But at the same time, 40 percent feel anxious when they think about financial planning as a couple - and 20 percent admit to hiding purchases and cash from their partners.

The Big Week Ahead

If you're a stock investor, this is a week for you to keep your eyes and ears open. One-third of the 30 components of the Dow Jones Industrial Average and 144 companies on the S&P 500 index are due to report their earnings, making for one of the busiest earning stretches this season.

The parade of reports could provide some good news for a market that has mostly skidded lower over the past several sessions. Both benchmarks, as well as the tech-heavy Nasdaq, finished Friday with their steepest weekly declines since the end of May.

The big names from the Dow that are set to report include Coca-Cola, Caterpillar, McDonald’s and Visa. But maybe the most intriguing is a non-Dow company, Facebook, which will report earnings on Wednesday. Facebook is expected to announce a $2 billion hit to earnings in order to settle a fine from the FTC over data privacy. 

New Jersey's New Claim to Fame

Which state saw the biggest drop in its unemployment rate last month? Why, it’s our own New Jersey. Unemployment here in the Garden State dropped from an already low  3.8 percent in May to 3.5 percent in June, according to new figures out from the Bureau of Labor Statistics.

That 0.3 percentage point drop edged out Colorado and Alabama, which both fell by 0.2 percentage points, to lead the nation last month. The overall nationwide unemployment figure is 3.7 percent, but state unemployment figures range from a low of 2.1 percent in Vermont to a high of 6.4 percent in Alaska.

New Jersey’s 3.5 percent unemployment rate marks the lowest in our state’s history for as long as these figures have been kept, which dates back to 1976. According to the BLS, we have added 47,600 jobs over the past 12 months.

The Latest From the Beige Book

The U.S. economy continued growing at a “modest” rate in recent weeks, with consumers continuing to spend and a “generally positive” outlook overall despite disruptions caused by U.S. trade policy. That's according to the latest Beige Book, published by the Federal Reserve yesterday.

Employment continued to expand and “labor markets remained tight, with contacts across the country experiencing difficulties filling open positions,” the Fed reported. “The outlook generally was positive for the coming months, with expectations of continued modest growth, despite widespread concerns about the possible negative impact of trade-related uncertainty.”

In our area, ports along the East Coast saw robust activity, with one reporting record-breaking imports led by furniture. On the other hand, prices for Broadway theater admissions were down roughly 10 percent from a year earlier.

Fund Fees Are Falling

Investing in equity and hybrid mutual funds through 401(k) plans became cheaper in 2018 according to a new report from the Investment Company Institute, a trade group for the fund industry. This is part of a longer-term trend; the fees investors have been paying have dropped significantly since 2000.

At the end of last year, mutual funds represented 63 percent of the $5.2 trillion in 401(k) plan assets. Plan participants incurred an average expense ratio of 0.41 percent for equity mutual funds in 2018, which is down from 0.45 percent in 2017 and  down from 0.77 percent in 2000 — a 47 percent decline.

The average expense ratio that 401(k) plan participants incurred for investing in hybrid mutual funds fell to 0.49 percent in 2018, down from 0.51 percent in 2017 and 0.72 percent in 2000. Bond mutual fund investors, on the other hand, saw their average expense ratio hold steady at 0.34 percent between 2017 and 2018, although they're down from 0.6 percent in 2000.

The Chinese Slowdown

While the American economy continues to be strong, China's economic growth has slumped to its lowest level in nearly three decades. The country's GDP grew at 6.2 percent in the quarter ended June, according to government figures released on Monday. That's the slowest quarterly growth since 1992 and down from 6.4 percent in the previous quarter.

China's exports fell 1.3 percent year-on-year for the first half in dollar terms, while imports dropped 7.3 percent. The country recorded a sharper decline in exports to the United States, which decreased 8.1 percent for the first six months of 2019. Imports from the United States plunged 30 percent year on year.

This is already affecting American companies that do business in China. To take one significant example, Apple's revenue in the Greater China region, which includes Hong Kong and Taiwan and accounts for 18 percent of its overall revenue, dropped 21.5 percent in the second quarter from the same period a year ago.

What American Kids Need

Are you giving more money to your adult children than you are to your retirement plan? For many Americans, this is the tradeoff they're facing. According to a report by Merrill Lynch and Age Wave, U.S. parents spend $500 billion a year on their 18- to 34-year-old adult children – twice the amount they contribute to their retirement savings.

Seventy percent of adults between the ages of 18 and 34 received some sort of parental financial support in the last year, with over half of those between the ages of 30 and 34, the report states. More than half of all millennials acknowledge that they could not afford their current lifestyle without the financial support of their parents.

What are parents paying for? The report shows that they aren’t just helping their grown children with emergencies. Some 60 percent are covering food and groceries, 54 percent are covering cell phones, and 47 percent are helping with car expenses.

A Record Day for the S&P

The S&P 500 Index  hit an all-time intraday high on Wednesday, rising above 3,000 for the first time, before closing at 2,993, its second-highest close. More remarkably, of the S&P’s 500 components, a whopping 54 stocks hit intraday highs as well.

Among the more notable names setting new highs:

• PayPal, which is up 42 percent year-to-date
• Lockheed Martin, up 41 percent
• Microsoft, up 36 percent
• Starbucks, up 37 percent
• American Express, up 33 percent
• Costco, up 33 percent
• Oracle, up 33 percent
• Waste Management, up 32 percent
• Walt Disney, up 31 percent
• Dollar General, up 30 percent

The Biggest Earnings Movers

As we close in on earnings season, Bespoke Investments has put together a list of the stocks that tend to move the most when they report their earnings. In first place is TravelZoo, an Internet travel site that has seen its share price move an average of 13 percent, up or down, every time it reports.

The other big movers tend to be smaller stocks the size of TravelZoo - with the very large exception of Netflix. The full Top Ten:

1. TravelZoo: 13.0 percent
2. Netflix: 12.8 percent
3. Stamps.com: 12.6 percent
4. iRobot: 12.2 percent
5. Synchronoss Tech: 11.9 percent
6. Sierra Wireless: 11.8 percent
7. Glu Mobile: 11.8 percent
8. Fossil: 11.7 percent
9. Skechers USA: 11.5 percent
10. First Solar: 11.4 percent

The Winning Sectors

Despite all the good economic news and the continued strength of the stock market, earnings growth is expected to slow to a crawl this year for large U.S. companies. In fact, during the first quarter of 2019, earnings per share declined from a year earlier for most of the S&P 500’s sectors, six out of the total of eleven.

Which sectors were able to grow earnings? These are the fortunate five:

• Health care, 9.8 percent
• Real estate, 7.4 percent
• Financials, 6.2 percent
• Industrials, 5.9 percent
• Information technology, 4.0 percent 

According to S&P Global Market Intelligence, only three of these sectors are expected to continue to show earnings growth when the second-quarter numbers are revealed: Financials, Health care, and Industrials.

Optimizing Your Social Security Strategy

Have you thought about when you'll start taking Social Security? According to a new report from United Income, almost all American retirees claim Social Security at the wrong time. The upshot is that they will miss out on a collective $3.4 trillion in benefits before they die.

While they can tap their benefits as early as age 62, retirees could boost the size of their checks for every year they wait until age 70, when they can get the maximum benefit. The advantage in waiting is substantial: A person eligible for a $725 monthly check at 62 could get $1,280 if they wait to start at age 70.

Only 4 percent of U.S. retirees are waiting until age 70 to claim Social Security, but 57 percent should be doing so, the report calculated. Meanwhile, more than 70 percent start taking checks before turning 64, a time when ideally only 6.5 percent of retirees should be cashing checks. The lost income from these less-than-optimal decisions amounts to about $111,000 per household, the researchers estimate.

The June Jobs Report

The employment picture bounced back strong in June, following a disappointing month of May, according to figures out this morning from the Bureau of Labor Statistics. The American economy added 224,000 jobs last month, after adding just 24,000 jobs in May. The headline unemployment rate ticked up to 3.7 percent.

All told, for the first half of 2019, we have averaged a solid 172,000 new jobs per month. That's down a bit from the strong pace of 223,000 jobs per month we saw in 2018, although the June report was back to that level.

The leading industry for job growth last month was health care, which added 35,000 jobs. Employment in transportation and warehousing expanded by 24,000 in June, while construction added 21,000. Over the past 12 months, construction employment has increased by 224,000.

Thoughts for Independence Day

"Those who expect to reap the blessings of freedom must undergo the fatigue of supporting it." ~ Thomas Paine

"Freedom is nothing but a chance to be better." ~ Albert Camus

"Men first crossed the Atlantic not to find soil for their ploughs but to secure liberty for their souls." ~ Robert J. McCracken