More bad news for global investors: The world's third-largest economy, that of Japan, has officially entered recession. The government announced yesterday that the Japanese economy contracted by 1.9 percent in the third quarter, as capital spending declined and private consumption remained weak. That marks the second consecutive quarter in which the economy shrunk, the technical definition of recession.
The third-quarter performance was worse than most economists expected. but it was much better than the country's second quarter. Japan's economy shrunk by 6.7 percent then.
Japanese Prime Minister Shinzo Abe has made the economy a cornerstone of his administration. Abe is up for re-election next week, but most observers expect him to win - recession notwithstanding.
Tuesday, December 9, 2014
Monday, December 8, 2014
How Will You Spend Your Retirement?
A new study in the Journal of Financial Planning looks at how retirees spend their time as opposed to people who are still working, and the results are pretty enlightening. Full-time workers spend an average of 447 minutes per day (nearly seven and a half hours) working. Where does that time go in retirement?
A full hour - exactly 60 more minutes - goes to sleeping. Television and movies pick up even more time, an additional 126 minutes, or more than two hours. In addition, household activities like cooking and gardening consume a lot of that extra time. Retirees spend an average of a half hour per day on "lawn, garden and houseplant care."
The upshot is that expenses tend not to rise very much if at all for retirees, who tend to add low-cost activities to their schedules to make up for the work hours. That's one reason retirement can be less expensive than many people expect.
A full hour - exactly 60 more minutes - goes to sleeping. Television and movies pick up even more time, an additional 126 minutes, or more than two hours. In addition, household activities like cooking and gardening consume a lot of that extra time. Retirees spend an average of a half hour per day on "lawn, garden and houseplant care."
The upshot is that expenses tend not to rise very much if at all for retirees, who tend to add low-cost activities to their schedules to make up for the work hours. That's one reason retirement can be less expensive than many people expect.
Friday, December 5, 2014
A Blowout Jobs Report
November's jobs report was the biggest we've seen in nearly three years, with the Bureau of Labor Statistics reporting that the economy added 321,000 jobs. That's an increase of nearly 100,000 over the average job gain of 224,000 for the prior 12 months. The unemployment rate was unchanged at 5.8 percent.
That makes November the biggest month for employment since January 2012, when the economy added 360,000 new jobs. It also means we've seen job growth of at least 200,000 for ten straight months now, and positive job growth for 50 straight months - the longest such streak since World War II.
The biggest increase was in professional and business services, which added 86,000 jobs for the month. But the gains were very broad-based. Retail, health care, manufacturing and financial activities all added at least 20,000 jobs.
That makes November the biggest month for employment since January 2012, when the economy added 360,000 new jobs. It also means we've seen job growth of at least 200,000 for ten straight months now, and positive job growth for 50 straight months - the longest such streak since World War II.
The biggest increase was in professional and business services, which added 86,000 jobs for the month. But the gains were very broad-based. Retail, health care, manufacturing and financial activities all added at least 20,000 jobs.
Thursday, December 4, 2014
Businesses Are Getting Bigger
For all the talk we hear about small business being the bedrock of our economy, one of the quiet trends in the American economy continues to be the growing size of businesses. The Labor Department reported yesterday that as of the first quarter, businesses with 500 or more employees accounted for 46.3 percent of all U.S. private-sector workers. Ten years ago, that figure was 44.2 percent. Businesses with fewer than 50 employees saw their share of employment slip from 30.2 percent to 28.4 percent over the same time frame.
Labor's figures also show there were 213,000 new businesses created in the first quarter. That's just slightly up from the 207,000 that formed in the first quarter of 2004 - and something of a decline when you consider that there are 6.6 million more workers on private-sector payrolls now.
Economists have long struggled to understand why wages have been growing so slowly lately, by only about 2 percent annually. It could simply be that as U.S. companies are getting bigger, workers have fewer employers to choose from.
Labor's figures also show there were 213,000 new businesses created in the first quarter. That's just slightly up from the 207,000 that formed in the first quarter of 2004 - and something of a decline when you consider that there are 6.6 million more workers on private-sector payrolls now.
Economists have long struggled to understand why wages have been growing so slowly lately, by only about 2 percent annually. It could simply be that as U.S. companies are getting bigger, workers have fewer employers to choose from.
Wednesday, December 3, 2014
Hedge Funds Closing Up Shop
A report from Bloomberg News yesterday looked at what a tough year it has been for hedge funds. Through the first half of this year, 461 hedge funds had shut their doors. At that pace, we could have the worst such year since 2009, when 1,023 hedge funds closed down, a record number.
In 2009, we had the recession to blame. This year, we've had an economy that continues to recover and a stock market that has returned roughly 12 percent to date, as measured by the S&P 500. By contrast, the average hedge fund has returned just 2 percent this year. It's no wonder they've been shutting down.
Another result of that poor performance is that nearly all the assets are flowing to the larger, more established hedge funds. In the first half of 2014, according to the Bloomberg report, roughly a third of the $57 billion invested into hedge funds went into just 10 firms.
In 2009, we had the recession to blame. This year, we've had an economy that continues to recover and a stock market that has returned roughly 12 percent to date, as measured by the S&P 500. By contrast, the average hedge fund has returned just 2 percent this year. It's no wonder they've been shutting down.
Another result of that poor performance is that nearly all the assets are flowing to the larger, more established hedge funds. In the first half of 2014, according to the Bloomberg report, roughly a third of the $57 billion invested into hedge funds went into just 10 firms.
Tuesday, December 2, 2014
Oil's Black Friday
Black Friday for holiday shoppers was echoed last week by a different kind of Black Friday for the commodities market. The price of crude oil fell by more than 10 percent in a single day, but it was accompanied by other price drops as well: Silver fell 6.4 percent, natural gas fell 6.1 percent, copper fell 5.8 percent.
The trigger appears to have been an announcement by OPEC that those nations would not cut back on their oil production, despite the fact that we are in a bit of a worldwide glut right now. U.S. oil production is also at its highest rate in three decades.
Oil prices are now down 39 percent since the highs they set earlier this year. They're down 52 percent from their all-time high in 2011 - meaning that the price of oil has been cut in half in the space of four years.
The trigger appears to have been an announcement by OPEC that those nations would not cut back on their oil production, despite the fact that we are in a bit of a worldwide glut right now. U.S. oil production is also at its highest rate in three decades.
Oil prices are now down 39 percent since the highs they set earlier this year. They're down 52 percent from their all-time high in 2011 - meaning that the price of oil has been cut in half in the space of four years.
Monday, December 1, 2014
Records Keep On Falling
The stock market has been doing so steadily well this year, that it's easy to lose track of the fact that the S&P 500 keeps setting record high after record high. With one month - 23 trading days - left to go in 2014, the S&P has already closed at a new record 47 different times this year.
In the past 87 years, there have been only four full years in which the S&P has set more than 47 record highs. The most recent one, and the all-time record holder, is 1995, when we saw 77 separate record highs.
Second place is 1964, with 62 records, which is probably out of reach. We have a better shot at reaching the mark set in 1928, when there were 59 record highs. And we should eclipse the fifth-highest mark of all time, 1929, which saw 48 new highs. We're only one trading day short of that.
In the past 87 years, there have been only four full years in which the S&P has set more than 47 record highs. The most recent one, and the all-time record holder, is 1995, when we saw 77 separate record highs.
Second place is 1964, with 62 records, which is probably out of reach. We have a better shot at reaching the mark set in 1928, when there were 59 record highs. And we should eclipse the fifth-highest mark of all time, 1929, which saw 48 new highs. We're only one trading day short of that.
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