Economic Update June 29, 2015

Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “The great thing about getting older is that you don’t lose all the other ages you’ve been.” – Madeleine L’Engle WEEKLY TIP               Are you a sole proprietor? If so, see if any net earned income you receive from your business entity may be subject to self-employment tax. This is also worth looking at if you are a manager in an LLC or an active partner in a partnership. WEEKLY RIDDLE              Constantly hungry, I must always be fed – and any finger I touch will soon turn red. What am I? Last week’s riddle: What falls yet does not make noise?   Last week’s answer: Night.           June 29, 2015     CONSUMER SPENDING INCREASES 0.9% This May gain represents quite a change from the mere 0.1% improvement recorded by the Commerce Department for April. It appears households have started to spend some of the money they saved on fuel and energy costs this winter. Consumer incomes rose 0.5% in May, replicating their April advance.1      HOUSEHOLDS FEEL MORE OPTIMISTIC The University of Michigan announced a final June reading of 96.1 for its consumer sentiment index – its highest mark since January. Analysts polled by Briefing.com had expected no change from the final May reading of 94.6.2   HOUSING MARKET LEAVES DOLDRUMS BEHIND A 2.2% increase in May took new home buying to a level unseen since February 2008: an annualized pace of 546,000 units. Moreover, the Census Bureau reported a 19.5% year-over-year gain for new home purchases. Existing home sales rose 5.1% in May according...

Economic Update June 22, 2015

Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “Integrity without knowledge is weak and useless, and knowledge without integrity is dangerous and dreadful.” – Samuel Johnson WEEKLY TIP               June is a time to assess your 2015 financial objectives. In terms of debt reduction, retirement saving and portfolio performance, are you on pace toward your yearly goals? WEEKLY RIDDLE              What falls yet does not make noise? Last week’s riddle: I am the beginning of sorrow, and the end of sickness. You cannot express happiness without me, yet I am always in risk. I am never in danger, though. What am I?   Last week’s answer: The letter S.           June 22, 2015     WILL THE FED MAKE A MOVE IN THE FALL? The Federal Reserve left interest rates alone last week, but its median federal funds rate forecast for the end of 2015 is now at 0.625%. That would seem to suggest multiple adjustments to the key interest rate in the last half of this year, but Fed chair Janet Yellen noted last week that the central bank is looking for “more decisive evidence that a moderate pace of economic growth will be sustained” before making any move. The Fed now projects 2015 GDP at only 1.8-2.0%, down from a range of 2.3-2.7% this spring. Futures markets point to the Fed raising interest rates from historic lows in December, though many economists think the incremental tightening will start in September.1      CPI UP 0.4% IN MAY, BUT INFLATION STILL MUTED Gas prices soared 10.4% last month, prompting a notable rise in the headline...

Economic Update June 15, 2015

Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “How much easier it is to be critical than to be correct.” – Benjamin Disraeli WEEKLY TIP               If you have a large family, it may seem that you should have 3-4 cars, or at least newer and larger vehicles. Think twice about that, as it invites greater household debt.      WEEKLY RIDDLE              I am the beginning of sorrow, and the end of sickness. You cannot express happiness without me, yet I am always in risk. I am never in danger, though. What am I? Last week’s riddle: On a summer day, two fathers and two sons went fishing and each one of them caught one fish. Why did they return home with just three fish?   Last week’s answer: Because it was a grandfather, a father and a son who went fishing.           June 15, 2015     SPRING SEES MORE SHOPPING Last week, the Commerce Department announced a 1.2% jump in retail sales for May, topping the 1.1% rise forecast by analysts polled by Briefing.com. Driving the improvement: a 3.7% leap in gas station sales. Purchases increased 2.1% at home improvement outlets, 2.0% at auto dealers and auto parts stores, 1.5% at clothing shops and 1.4% at online retailers. April retail sales were revised from flat to +0.2%, and that makes three straight months of gains.1      WHOLESALE INFLATION INCREASES  Rising gasoline and egg prices influenced the 0.5% gain in the Producer Price Index for May – its largest monthly advance since fall 2012. The core PPI (which strips out energy and food items)...

Economic Update June 8, 2015

Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE      WEEKLY QUOTE                “Sometimes a slow gradual approach does more good than a large gesture.” – Craig Newmark WEEKLY TIP               If you are starting up a small business, realistically list all essential expenses you will incur during the first six months, from utility and Internet bills to rent and employee wages.    WEEKLY RIDDLE              On a summer day, two fathers and two sons went fishing and each one of them caught one fish. Why did they return home with just three fish? Last week’s riddle: You throw it out when you need to use it. You bring it up when you don’t. As you travel, it goes with you. What is it?   Last week’s answer: An anchor.           June 8, 2015     NO LETUP IN HIRING IN MAY Last Thursday, the International Monetary Fund took the unusual step of offering the Federal Reserve some advice – it urged the central bank not to raise interest rates until 2016. Given the large hiring gains this spring, the Fed may choose to ignore that recommendation. U.S. employers added 280,000 new workers last month; since the labor force participation rate slightly increased, the jobless rate ticked up to 5.5% in May with the broader U-6 rate (unemployed+ underemployed) remaining at 10.8%. According to Labor Department data, 120,000 of the new jobs were in the leisure & hospitality and service industry sectors, but there were also 47,000 hires in the health care sector.1     Consumer spending was flat IN April  This news was a disappointment after the 0.5% advance the...

Economic Update June 1, 2015

Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE      WEEKLY QUOTE                “Try to learn something about everything and everything about something.” – Thomas H. Huxley WEEKLY TIP               Most consumer expenses boil down to choices and options rather than necessities. Keeping that in mind could help you save money month-to-month.    WEEKLY RIDDLE              You throw it out when you need to use it. You bring it up when you don’t. As you travel, it goes with you. What is it? Last week’s riddle: Your mother’s brother’s only brother-in-law is taking a picture of you. How is he more closely related to you?   Last week’s answer: He is also your father.           June 1, 2015     THREE KEY REAL ESTATE INDICATORS IMPRESS All of a sudden, the housing market looks much healthier. The Census Bureau reported a 6.8% jump in new home buying in April, and the National Association of Realtors said its pending home sales index improved 3.4% in that month to 108.7 (its best reading since May 2006). The numbers that matter most were also impressive: year-over-year, new home sales were up 26.1% and pending home sales 14.0% (even as existing home inventory declined). Additionally, the March 20-city S&P/Case-Shiller home price index showed a 5.0% annualized gain (the broader national home price index rose 4.1% in 12 months).1,2     HARD GOODS REPORT PRESENTS MIXED MESSAGE  Total durable goods orders fell 0.5% in April, yet the Commerce Department found core durable goods orders (excepting transportation orders) up 0.5% for that month. Shipments of core durables rose 0.8% in April after a 1.0% gain for March.3...