Inflation, incomes and spending are all still growing - but slowly. According to the monthly report published yesterday by the Bureau of Economic Analysis, the Personal Consumption Expenditures (PCE) price index in September rose 0.1 percent on a monthly basis to match August's reading. On a yearly basis, PCE edged down to 2 percent from 2.2 percent. Meanwhile, core PCE, which strips volatile food and energy prices, increased 0.2 percent in September.
Meanwhile, the Commerce Department reported that income recorded its smallest gain in more than a year on moderate wage growth. All told, personal income increased $35.7 billion, or 0.2 percent, in September.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.4 percent last month. The growth came as households bought more motor vehicles and spent more on health care. Personal consumption expenditures increased $53.0 billion for the month, or 0.4 percent.
Monday, October 29, 2018
Third Quarter GDP Report
Gross domestic product decelerated a bit to a 3.5 percent annual pace in the third quarter, down from a torrid 4.2 percent pace in the prior three months, the Commerce Department said Friday. But expansion in the last two quarters is still the fastest six months of growth in four years.
What caused this? Consumer spending rose 4 percent in the third quarter, even stronger than the prior three months. This was offset somewhat by a slowdown in business and residential investment. Household investment has fallen for three straight quarters.
The value of unsold goods - or business inventories - added 2.1 percentage points to growth, as companies stocked up. A significantly larger trade deficit took 1.8 points off top-line growth. Government spending picked up, expanding 3.3 percent after a 2.5 percent gain in the second quarter.
What caused this? Consumer spending rose 4 percent in the third quarter, even stronger than the prior three months. This was offset somewhat by a slowdown in business and residential investment. Household investment has fallen for three straight quarters.
The value of unsold goods - or business inventories - added 2.1 percentage points to growth, as companies stocked up. A significantly larger trade deficit took 1.8 points off top-line growth. Government spending picked up, expanding 3.3 percent after a 2.5 percent gain in the second quarter.
Friday, October 26, 2018
Bear Market? Not So Fast
A market correction is often defined as a 10 percent pullback from a recent peak. Using that as a yardstick, after yesterday's stock market plunge, the S&P 500 is about 2 percentage points away from joining the Nasdaq Composite in correction mode.
But a correction doesn’t necessarily mean that a bear market is lurking around the corner. In fact, history and data make for a strong case that this recent selloff is nothing out of the norm. Data from the Schwab Center for Financial Research showed that there have been 22 market corrections since 1974 and only four of them, occurring in 1980, 1987, 2000 and 2007, eventually ended up as bear markets.
Even in the current bull market. which started in 2009, there have been six corrections that avoided turning into bears. Most recently, a dive in February was followed by stocks getting back to record territory by late summer.
But a correction doesn’t necessarily mean that a bear market is lurking around the corner. In fact, history and data make for a strong case that this recent selloff is nothing out of the norm. Data from the Schwab Center for Financial Research showed that there have been 22 market corrections since 1974 and only four of them, occurring in 1980, 1987, 2000 and 2007, eventually ended up as bear markets.
Even in the current bull market. which started in 2009, there have been six corrections that avoided turning into bears. Most recently, a dive in February was followed by stocks getting back to record territory by late summer.
Thursday, October 25, 2018
The Big Drop
You've heard about it by now: Yesterday the Dow and the S&P 500 index wiped out all their hard-fought gains over the past 10 months to turn negative for 2018. October is shaping up to be a brutal month, with the S&P falling 8.9 percent month-to-date, the Dow down 7.1 percent, and the Nasdaq down 11.7 percent.
Indeed, the S&P 500 has had 14 down days so far in October, the highest number of losing days for the index since May of 2012 when it fell 14 days, according to Dow Jones Market Data. One more loss, and it will mark its highest number of down days since October of 2008.
Meanwhile, the Nasdaq Composite Index shed 329.14 points, or 4.4 percent, to 7108.4, which put the index more than 10 percent below its August 29 all-time high, meeting the widely used definition of a market correction. The loss also marked the worst day for the Nasdaq since August 18, 2011.
Indeed, the S&P 500 has had 14 down days so far in October, the highest number of losing days for the index since May of 2012 when it fell 14 days, according to Dow Jones Market Data. One more loss, and it will mark its highest number of down days since October of 2008.
Meanwhile, the Nasdaq Composite Index shed 329.14 points, or 4.4 percent, to 7108.4, which put the index more than 10 percent below its August 29 all-time high, meeting the widely used definition of a market correction. The loss also marked the worst day for the Nasdaq since August 18, 2011.
Wednesday, October 24, 2018
Women's Worries
Women have a more negative view of their financial health than men, even if they’re in good shape financially. That’s according to Prudential’s new Financial Wellness Census, which finds that among financially healthy women, 10.1 percent have a negative view of their money situation, compared with just 6.3 percent of financially healthy men. The same holds true, with no statistically significant difference, among women who aren’t financially healthy.
Prudential defined “financially healthy” as doing better than average, based on income levels, savings and debt. On average, women have saved 43 percent less for retirement than men. In addition, 46 percent say they have no retirement savings at all.
The data shows women and men on average expect to retire at age 67. But women have saved an average of only $115,000 compared with an average of $203,000 for men. That may be contributing to their negative views of their finances.
Prudential defined “financially healthy” as doing better than average, based on income levels, savings and debt. On average, women have saved 43 percent less for retirement than men. In addition, 46 percent say they have no retirement savings at all.
The data shows women and men on average expect to retire at age 67. But women have saved an average of only $115,000 compared with an average of $203,000 for men. That may be contributing to their negative views of their finances.
Tuesday, October 23, 2018
The New Charitable Landscape
It looks like we're in for a giving year. Eighty-two percent of Americans who itemized charitable deductions on their 2017 tax returns plan to maintain or increase their giving this year, according to a survey released this week by Fidelity Charitable.
The downside is that the poll also found that 58 percent of donors still planned to itemize in 2018, even though in the new tax landscape, that's not always appropriate. Many donors may not have fully worked out how the increased standard deduction in the revised tax code affects them.
For example, half of households with incomes of less than $100,000 currently plan to itemize their 2018 taxes, the survey showed. Fidelity Charitable said most of these donors will likely discover that their itemizations, including charitable donations, will not push their total deduction amount past the newly enacted standard deduction thresholds, of $12,000 for singles and $24,000 for married couples.
The downside is that the poll also found that 58 percent of donors still planned to itemize in 2018, even though in the new tax landscape, that's not always appropriate. Many donors may not have fully worked out how the increased standard deduction in the revised tax code affects them.
For example, half of households with incomes of less than $100,000 currently plan to itemize their 2018 taxes, the survey showed. Fidelity Charitable said most of these donors will likely discover that their itemizations, including charitable donations, will not push their total deduction amount past the newly enacted standard deduction thresholds, of $12,000 for singles and $24,000 for married couples.
Monday, October 22, 2018
Housing Sales Are Slowing
Has the housing market run out of gas? Existing-home sales ran at a seasonally adjusted annual rate of 5.15 million in September, the National Association of Realtors said last week, which was a 3.4 percent decline from August. It was the lowest pace of sales since November 2015.
Sales of previously owned homes had stabilized in August after declining for four straight months, so September’s drop came as a bit of a surprise. Sales were 4.1 percent lower than year-ago levels.
On the other hand, the median sales price in September was $258,100, which was 4.2 percent higher than a year earlier. Inventory is ticking up gradually: At the current pace of sales, it would take 4.4 months to exhaust available supply, up from 4.3 months last month. And it’s taking properties longer to get snatched up: Homes stayed on the market for 32 days in September, up from 29 days in August.
Sales of previously owned homes had stabilized in August after declining for four straight months, so September’s drop came as a bit of a surprise. Sales were 4.1 percent lower than year-ago levels.
On the other hand, the median sales price in September was $258,100, which was 4.2 percent higher than a year earlier. Inventory is ticking up gradually: At the current pace of sales, it would take 4.4 months to exhaust available supply, up from 4.3 months last month. And it’s taking properties longer to get snatched up: Homes stayed on the market for 32 days in September, up from 29 days in August.
Subscribe to:
Posts (Atom)