Here’s the most important financial data that you need to know to be fairly well informed. Each week I post the weekending scorecard of data for 8 financial markets and 10 economic indicators. As of 4/19/2013:
The week was bumpy in stocks, crude oil futures came down quite a bit, as did gold and other metals, as fears of inflation eased, and lower estimates of economic growth in China. US Recession Watch* We are enjoying a sluggish recovery, led by low jobs and income growth. There are several things to be positive about, such as slightly good manufacturing output, a little uptick in consumer spending vs last year, and better sales in real estate and automotive. On the negative side GDP increased only 0.1% last quarter and we still have a high Federal deficit and debt and unproductive Federal government to put forth a balanced budget.
- Mortgage Rates DECREASE: 30-year last/this week: 3.54%/3.51%, 15-year 2.78%/2.74%
- Dow Jones Industrial Average DECREASE from 14,865 to 14,547
- S&P 500 DECREASE from 1588 to 1555
- US Treasury’s MIXED: 2-Year Note from .266% to .234%, 10-Year Note from 1.697% to .,720%
- Crude Oil Futures DECREASE from $90.95 to 88.70
- Gold prices DECREASE from $1485 to $1435 (High $1,895 9/6/11) per ounce
- Euro DECREASE from 1.3115 to 1.3048 (all time 1.59 7/2008)
- US Dollar Index INCREASE from $82.29 to $82.78
RECESSION WATCH SCORECARD: *
FINANCIALS:* 4 NEGATIVE vs 3 POSITIVE 🙁
- Gross Domestic Product (GDP) – Negative, real GDP had a small increase of 0.1% in the fourth quarter of 2012. The economy grew 2.2% in 2012 up from 1.8% in 2012. We really need to see GDP in the 4% – 6% range to fuel an economic recovery. From 1947 – 2012 it has averaged 3.23.
- Manufacturing output – Positive, for the first time since the first part of last year, we are starting to see some positive change in US manufacturing output. This is a good indication of how industry is doing; it was modestly increasing a year ago, leading to some guarded optimism, but for the balance of 2012 it decreased.
- US Consumer Spending – Positive, is currently at 79 compared to 76 one year ago. Generally overall the past 12 months has not been strong, holiday spending was down; however, this year we are definitely seeing an uptrend. Economists watch consumers’ spending trends to try to track their confidence in the economy. The more confidence consumers have, the more willing they are to spend money.
- US Household Debt Service – Positive, as a percentage of people’s disposable income is at 10.69% (June) and has been steadily decreasing from its 10 year high of about 14% in the 3rd quarter of 2008. We are keeping a watchful eye on this number, since early indicators are showing an uptick in consumer debt.
- The Federal Deficit – Negative, is projected by the Congressional Budget Office to be $1.1 trillion for 2013; this will make 5 years in a row it has exceeded $1 trillion, and this doesn’t include all the money our Federal government borrows.
- The US National debt – Negative, exceeds $16.7 trillion.
- Consumer Price Index – Negative, U.S. consumer prices jumped by 0.7 percent in February, the largest increase since June 2009 due to the increase in gasoline costs last month. Annualized growth rate through December for the CPI in 2012 was 1.70%, compared to 3.0% in 2011. The long-term average annualized rate of 3.63%. The CPI is the most common indicator of inflation.
JOBS: 1 POSITIVE, 1 NEGATIVE 😐
- Monthly change in non-farm payrolls – Negative: Just 88,000 jobs were added in March, compared to 236,000 added in February, 157,000 in January, and 155,000 added in December.
- Unemployment – Positive: Marches rate of 7.6% is a four year low, compared to February’s rate of 7.7%, and December’s 7.9%. This is better than some months in 2012 of over 8% – showing a little improvement. However, keep in mind this ‘Official Unemployment’ rate only tracks those who are without jobs and have actively sought work within the past 4 weeks. Since this statistic does not track all people who are not working, some websites report that the ‘Real Unemployment’ rate is about 15% when all able-bodied people of working age are considered. For a historical perspective: The unemployment rate during the Great Recession peaked at 10.10% in October 2010. In 2012 it has varied in the range of 8.10% – 8.30%, so we are not seeing a lot of change this year. It could be worse when you consider that during the Great Depression it peaked at about 25% in 1933.
- Initial Jobless Claims for Unemployment Insurance – Neutral: The four week average was hovering around 340,000 but is now back in the 350,000’s. Looking back 52 weeks it averaged about 370,000, we are seeing a slight improvement in this number. This number is much better than it was in 2009 when it peaked at over 650,000, better than 2010 when it went from nearly 500,000 to the the low 400,000′s and for 2011 when claims were in the low to mid 400,000′s. The lowest we have seen this rate in 10 years is 282,000 in January of 2006, and the earlier part of the last decade we saw the average similar to what we are seeing now. During the Great Depression from 1929 – 1941 there was not the same level of unemployment insurance that we have today, although unions may have had some. It wasn’t until the Social Security act encouraged it in 1935. Today we have the Federal Unemployment Tax Act (FUTA) tax to fund state agencies.
*For an overview of GDP, Unemployment and Recession indicators, see previous article A primer on recession indicators, Gross Domestic Product and Unemployment.