The nation created twice as many new jobs as expected in July, according to the July employment situation report. It is likely to mean that, despite two consecutive quarters of negative economic growth, the United States is not in a recession but is undergoing an inventory correction. That’s one of multiple concurrent anomalies making the financial economic outlook more complicated than in living memory. As a rule of thu..
Real disposable personal income (DPI) per capita in the United States declined from $46,985 to $45,356 in the past 12 months, according to data released today by the U.S. Bureau of Labor Statistics. Consumer buying power shrunk by -3.5%. Here’s the breakdown of income and spending, crucial factors in the consumer driven economy of the U.S: Disposable personal income was up +3.3% compared to June 2021 – before adjusting for inflation. Inflatio..
Housing slumped again and the Leading Economic Indicator Index plunged for a third straight month, but the consensus forecast of leading economists is for no recession. The economy remains on the edge of a recession but the stock market this past week acted like the worst of the bear market may be over. Housing starts dropped for a second straight month. However, permits to start construction of a new single-family home are “holding up,” acco..
Retail sales climbed by +8.8% in the 12 months through June, according to the release Friday at 8:30 a.m., by the Census Bureau. The news brightened the near-term economic outlook, and it sparked a +1.9% one-day surge in stock prices. The sharp rally in stocks followed Wednesday’s worse-than-expected inflation release showing the Consumer Price Index (CPI) soared +9.1% in the same 12-month period through June. To be clear, the +8.8% retail sale..
The U.S. economy added 372,000 new jobs in June, easing fears of a recession. Strong job creation makes a three-quarter of 1% rate hike likely on July 27, when the Federal Reserve releases its next policy statement. The Wednesday, July 13, 8:30 a.m. ET, Consumer Price Index (CPI) release is the next important economic indicator to watch. If the pace of inflation eases, as measured by the CPI, then a “soft landing” could still be possible, and..
With the announcement that the variable interest rate on I-Bonds is going up to 9.6% from May to October (as far as I know we are still waiting to see if the fixed rate will remain at 0% or bump up a little) there is a lot of interest in them. Pro's: You can purchase them easily directly from the US Treasury at treasurydirect.gov . I-Bonds can be purchased for as little as $25. and in increments of $.01 thereafter, so are incredibly a..
Bad news on the economy and stock market seem to be mounting, which may be a good sign. Here’s the bad and good news a long-term investor needs to know. The second quarter ended on Thursday, June 30, 2022, with the Standard & Poor’s losing -16.5% in the three-month period. It was the worst quarter since the onset of the pandemic in the first quarter of 2020, when stocks plunged -19.6%. The first-half of 2022 was the worst six-..
You may have heard that on April 1st of this year, the yield curve inverted, and that an inevitable recession is coming. This, however, is only one part of a much bigger financial picture. When the yield curve inverts, most often what is being referenced is the 2-year treasury yield having surpassed the 10-year treasury yield. But not all yield curves have inverted. When you look at the spread between 10-year / 2-year treasuries in orange below..
As data on U.S. economic growth for the second quarter trickles in over the next month, signs that a recession is already under way may emerge. The economy is on the cusp of a recession. The economy shrunk by -1.5% in the first quarter of 2022 and the second quarter could be negative and, thus, begin a recession officially. However, some very key fundamentals remain positive and indicate a recession could be short and shallow. States are flush wi..
There is no 'taming the bear' when it comes to contractions of the business cycle like we are currently experiencing, but there are some guiding principles one can follow to make wiser decisions during these times. This Guide to Market Fluctuations from Capital Group® American Funds® is one of the most relevant pieces for investors I have come across recently. Please give it a read and keep these strategies in mind when considering c..
Earlier this month Forbes reported that Tesla (TSLA) was removed from the S&P ESG Index, citing "flaws in its business conduct and, ironically, aspects of the company’s low-carbon strategy". Yet companies like Amazon, United Health, and even Exxon Mobil make the cut. This inflamed Elon Musk who proclaimed, "ESG is a scam", but the truth may lie somewhere between two extremes. Read the Forbes article..
In an ominous sign a recession is on the way, the U.S. Index of Leading Economic Indicators ticked down four-tenths of 1% in May, following a decline of four-tenths of 1% in April. The LEI has a history of rolling over definitively before every recession since 1950, except for the Covid-19 recession. Comprised of 10 indexes, the LEI is a reliable forward-looking indicator of the foreseeable future. The LEI was doing just fine until Ap..
The inflation crisis of 2022 grew more fearsome with Friday’s release by the U.S. Bureau of Labor Statistics of a worse-than-expected consumer price index (CPI) report. For the 12 months through May 2022, CPI shot +8.6% higher, the highest rate since the inflation crisis of the late 1970s and early 1980s. Higher gas prices are the main factor. Meanwhile, other threats to U.S. economic growth linger, including the war in Ukraine, supply ch..
The Federal Reserve hiked rates on May 4 by a half-point. It was the first half-point hike since May 2000. This summer, the Fed plans two more half-point rate hikes, on June 15 and July 27. So this could be a long, hot summer for investors. Reminiscent of the 1958 movie, “The Long, Hot Summer,” starring “newcomer” Paul Newman and Joanne Woodward, who were married for 50 years after making the movie, this summer of financial and economic n..
Back from the brink of a bear market, the stock market snapped its seven-week losing streak. The Standard & Poor’s 500 index of blue-chip publicly-held U.S. companies gained +6.37% this past week. Just a week ago, the S&P 500 was down -19% and in the throes of the worst losing streak since 2001. However, according to consensus forecasts of economists, the U.S. is expected to grow by more than +2% in 2022. Newly released data on the Fede..
The headlines are ugly. “Late Rally Lifts Stocks After S&P 500 Skims Bear Market,” according to WSJ.com’s top story after Wall Street closed today. “Markets End Down for 7th Straight Week, Despite Late Rally,” according to NYT.com. Stocks are at the edge of a bear market – defined as a loss of -20% from the last record-high closing price of the Standard & Poor’s 500 index (on Jan. 3). Not since 2001, The Wall Str..
Despite a gain of +2.4% on Friday, the Standard & Poor’s 500 stock index declined for a sixth consecutive week – reportedly the longest losing streak since 2011. With stocks flirting with bear market territory – a loss of -20% from the last peak on January 3, 2022 – no one can say for certain when the financial and economic outlook will improve. Predicting the future is impossible. However, we do know how difficult times like these ha..
It’s been easy being a buy and hold investor. Until now. Stock market investments, as measured by the Standard & Poor’s 500 index, approximately doubled in value in the past five years. It was up 26.9% in 2021, 18.4% in 2020 and 31.5% in 2019, and it is 59.3% higher than at the bottom of the Covid bear market in March 2020. The stock market suffered another losing week and is in the throes of the longest weekly losing streak in over..
The U.S. economy shrunk -1.4% last quarter, but a +2.7% average growth rate is expected for the next four quarters. In the first quarter of 2022, Covid 19 disruptions to the supply chain stunted growth. “A slower pace of inventory investment by business in the first quarter -- compared with a rapid buildup in inventories at the end of last year -- also pushed growth down,” according to a front-page story in Friday’s Wall Street ..
The stock market had another bad week, as the Standard & Poor’s 500 dropped 2.8% Friday and lost -2.8% from last week’s closing price. The stock index is 11% lower than the all-time high of Jan. 3, back into correction territory. About 80% of public companies that have reported earnings for the first quarter of 2022 are beating analyst expectations, according to a report in The Wall Street Journal referencing FactSet, a financial da..