The Chinese economy appears to be taking a few more steps backward: In January, exports from China fell by 3.3 percent from year-ago levels, while imports fell by a whopping 19.9 percent. Coal imports dropped nearly 40 percent and oil imports fell by 7.9 percent, signaling a slowdown in the world's second-biggest economy.
China posted 7.4 percent GDP growth in 2014, which sounds impressive compared to our figures but was the slowest pace for that country in 24 years. And the Chinese government is expected to lower its GDP target to around 7 percent for 2015.
China's total GDP was an estimated $10.36 trillion in 2014, according to the International Monetary Fund. That's a distant second to the U.S. at $17.7 trillion, and will likely stay that way for a while, if China's growth continues to slow.
Tuesday, February 10, 2015
Monday, February 9, 2015
Employment in Overdrive
Friday's employment report brought not just another big month of job growth, with the economy adding 257,000 jobs in January, but revisions to earlier months that added another 147,000. The headline unemployment rate, though, ticked up from 5.6 percent to 5.7 percent - but even that may be good news.
Why is that? Because workers who had been discouraged by the slow economy are now coming back to the labor force in huge numbers - 703,000 in January alone. So even though we're adding more jobs, the denominator used to figure the unemployment rate is growing as well.
The upshot is that the economy is the strongest it's been in a long time. We've added an average of 268,000 jobs per month over the past year, and we hadn't had a 12-month stretch that strong since 2000. The revisions to the November jobs numbers that were released on Friday mean we added 423,000 jobs in that month alone - the strongest single month for job growth since 1997.
Why is that? Because workers who had been discouraged by the slow economy are now coming back to the labor force in huge numbers - 703,000 in January alone. So even though we're adding more jobs, the denominator used to figure the unemployment rate is growing as well.
The upshot is that the economy is the strongest it's been in a long time. We've added an average of 268,000 jobs per month over the past year, and we hadn't had a 12-month stretch that strong since 2000. The revisions to the November jobs numbers that were released on Friday mean we added 423,000 jobs in that month alone - the strongest single month for job growth since 1997.
Friday, February 6, 2015
Good News for Retirees!
The aftereffects of the recession have left a lot of people feeling like they've lost ground financially, but a new survey from T. Rowe Price refutes that: Three-quarters of today’s retirees feel better off than their parents were at the same age. Fifty-seven percent say they're living as well as or better than they did before retiring, and nearly all - 85 percent - said that they didn’t need to spend as much in retirement to be satisfied with their lives.
Perhaps one crucial factor is that retirees spend a lot of time taking care of their financial decisions. The survey found that 80 of the retirees track their expenses carefully, and 63 percent stick to a budget.
The upshot is that nearly four out of five respondents reported being on track to meet their financial goals in retirement. They're getting there with a little help: About half of those surveyed said that they had a financial advisor guide them through the retirement process.
Perhaps one crucial factor is that retirees spend a lot of time taking care of their financial decisions. The survey found that 80 of the retirees track their expenses carefully, and 63 percent stick to a budget.
The upshot is that nearly four out of five respondents reported being on track to meet their financial goals in retirement. They're getting there with a little help: About half of those surveyed said that they had a financial advisor guide them through the retirement process.
Thursday, February 5, 2015
Watching the Earnings Warnings
As you probably know, heading into earnings season, companies issue guidance reports so investors will know what to expect. So far this earnings season, many more companies have been lowering guidance as opposed to raising it - by a difference of 8.6 percentage points.
It's not uncommon for more companies to be negative than positive. From 2011 through 2014, we saw negative spreads every single earnings season, with the sole exception of the first quarter of 2014. But a spread of 8.6 percentage points is the worst that figure has been since the depths of the recession, in the fourth quarter of 2008 and the first quarter of 2009. In other words, companies are issuing negative warnings with more frequency than they have in five years.
That's the bad news. The good news is that investors are still responding well to earnings reports. Since the start of earnings season, according to Bespoke Investments, the average one-day change in reaction to earnings for the stocks that have reported has been a positive 0.43 percent. That's better than most quarters we've seen since the start of the recession.
It's not uncommon for more companies to be negative than positive. From 2011 through 2014, we saw negative spreads every single earnings season, with the sole exception of the first quarter of 2014. But a spread of 8.6 percentage points is the worst that figure has been since the depths of the recession, in the fourth quarter of 2008 and the first quarter of 2009. In other words, companies are issuing negative warnings with more frequency than they have in five years.
That's the bad news. The good news is that investors are still responding well to earnings reports. Since the start of earnings season, according to Bespoke Investments, the average one-day change in reaction to earnings for the stocks that have reported has been a positive 0.43 percent. That's better than most quarters we've seen since the start of the recession.
Wednesday, February 4, 2015
The Gasoline Windfall
One of the biggest financial stories of last year was the dramatic drop in gasoline prices, down $1.22 a gallon from where they were a year ago. Bloomberg News has tried to asses what that meant for the average American consumer, and reported that what we saved at the pump had the impact of a $125 billion tax cut.
Obviously, we could afford to drive more. In November, Americans drove 241 billion miles, the most for that month since 2007. So one of the big winners was drivable vacation destinations: Car traffic to Las Vegas, for example, jumped in the last quarter of 2014, after being down six of the previous nine months. Other winners include mass-market, working-class companies like Popeyes Chicken and Family Dollar.
But the spending spree may be coming to an end. After the average gas price in the U.S dropped for 123 straight days, that streak finally ended last week, and gas prices are finally starting to turn upward again.
Obviously, we could afford to drive more. In November, Americans drove 241 billion miles, the most for that month since 2007. So one of the big winners was drivable vacation destinations: Car traffic to Las Vegas, for example, jumped in the last quarter of 2014, after being down six of the previous nine months. Other winners include mass-market, working-class companies like Popeyes Chicken and Family Dollar.
But the spending spree may be coming to an end. After the average gas price in the U.S dropped for 123 straight days, that streak finally ended last week, and gas prices are finally starting to turn upward again.
Tuesday, February 3, 2015
Avoiding Charity Scams
The IRS released its annual list of the "Dirty Dozen" taxpayer scams yesterday. This year, they focused on fake charities and how to avoid getting taken advantage of. Some tips from the IRS:
- Be wary of charities with names (or web sites) that are similar to familiar, respected, nationally known organizations. Make sure the organization you're giving to is the one you intended. IRS.gov has a search feature, Exempt Organizations Select Check, to check up on any doubtful donees.
- Don’t give out personal financial information, such as Social Security numbers or passwords, to anyone who solicits a contribution from you. If you use a credit card number to make a donation, be very careful about whom you're speaking with, especially if donating by phone.
- Don’t give or send cash. Contributing by check or credit card provides documentation of the gift, making it better for both security and tax record purposes.
Monday, February 2, 2015
Welcome to Everyone's Least Favorite Month
Today is the first trading day of February, and investors might be expecting the market to be like the weather: cold and unforgiving. Over the past 20 years, February has had, on the aggregate, a negative return, with the S&P 500 index losing an average of 0.2 percent.
Only August has been a worse performer over that span, with an average monthly change of -0.9 percent. But the summer is historically a poor time overall for stocks. October through May is the part of the year when stocks make most of their money - and February is the only dud in that bunch.
There are two good things to say about this month. One, the trend has shown signs of turning around, with the last five Februarys all finishing in positive territory. And two, if this month has to be brutal, at least it's short.
Only August has been a worse performer over that span, with an average monthly change of -0.9 percent. But the summer is historically a poor time overall for stocks. October through May is the part of the year when stocks make most of their money - and February is the only dud in that bunch.
There are two good things to say about this month. One, the trend has shown signs of turning around, with the last five Februarys all finishing in positive territory. And two, if this month has to be brutal, at least it's short.
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