Economic Update June 20, 2016

Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “What we anticipate seldom occurs; what we least expected generally happens.” – Benjamin Disraeli WEEKLY TIP               When you own a small business, paying estimated taxes is a given. If you are a new business owner, think about creating a dedicated bank account to which you can direct a monthly amount for that purpose.     WEEKLY RIDDLE              What goes with you wherever you go, often demands an answer, and never asks you a question?       Last week’s riddle: At the sound of it, you may dream, dance, laugh, weep or even stamp your feet. What is it?   Last week’s answer: Music.           June 20, 2016     RETAIL SALES RISE another HALF-PERCENT This healthy May increase follows the 1.3% gain recorded by the Department of Commerce for April, and offers more evidence that the economy has rebounded from a sluggish first quarter. Core retail sales (minus auto and gasoline purchases) were up 0.4% last month.1   INFLATION CONTINUES TO FIRM According to the Bureau of Labor Statistics, consumer prices rose 0.2% in May while producer prices advanced 0.4%. While a drop in food prices tempered the gain in the Consumer Price Index, the core CPI (which strips out energy and food costs) was up 2.2% in a year, exceeding the Federal Reserve’s annualized inflation target. The May wholesale inflation jump still left the Producer Price Index up just 0.8% year-over-year; plunging energy costs have held the PPI in check.1,2    CONSTRUCTION ACTIVITY MODERATES IN MAY Building permits and housing starts both increased 4.9% in...

Economic Update June 13, 2016

Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “Early to bed and early to rise makes a man healthy, wealthy, and wise.” – Ben Franklin WEEKLY TIP               Millennials should not fall for the myth that you need to carry a lot of consumer debt to build a good credit score. A positive payment history can be established while carrying relatively little debt.      WEEKLY RIDDLE              At the sound of it, you may dream, dance, laugh, weep, or even stamp your feet. What is it?       Last week’s riddle: Three feet have I, yet not a single leg. What am I?   Last week’s answer: A yardstick.           June 13, 2016     A LITTLE LESS OPTIMISM IN EARLY JUNE On Friday, the University of Michigan’s initial June survey of consumer sentiment showed a slight retreat, with the index coming in at 94.3 versus its final May mark of 94.7. The survey’s chief economist, Richard Curtin, noted “consumers rated their current financial situation at the best levels since the 2007 cyclical peak largely due to wage gains” and also had “record low inflation expectations.” On the downside, consumers felt the economy was stronger a year ago.1   YELLEN OFFERS NO HINT OF SPRING RATE HIKE Speaking in Philadelphia last week, Federal Reserve chair Janet Yellen said she felt “the current stance of monetary policy is generally appropriate,” adding “at the same time, I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run.” Investors interpreted...

Economic Update June 6, 2016

Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “All the world’s a stage and most of us are desperately unrehearsed.” – Sean O’Casey WEEKLY TIP               Self-employed? Note that you can deduct 100% of your health insurance premiums (for yourself and your family) as an adjustment to gross income.     WEEKLY RIDDLE              Three feet have I, yet not a single leg. What am I?       Last week’s riddle: I descend softly, fade away gently, change the color of the ground, but I never go up the way I come down. What am I?   Last week’s answer: Snow.           June 6, 2016     MAY SAW WEAKEST JOB GROWTH IN 5+ YEARS Did any economist foresee payrolls expanding by just 38,000 jobs in May? The median forecast compiled by MarketWatch projected a gain of 155,000, not the worst number since September 2010. The Department of Labor reduced March and April payroll gains by 59,000 in its new report, meaning monthly job creation averaged 116,000 in the past three months. As labor force participation declined 0.6% in May, the headline jobless rate fell to 4.7%. Annualized wage growth was at 2.5%.1,2   CONSUMERS FLEX THEIR PURCHASING POWER In better news, personal spending rose 1.0% in April according to the Department of Commerce. This was the biggest monthly spending gain since August 2009. Personal incomes were up 0.4% in April as well.2,3    ONE OF TWO ISM PMIS IMPROVE Both of the purchasing manager indices maintained by the Institute for Supply Management were above the 50 level in May, indicating sector growth. The upside? The...

Economic Update May 30, 2016

Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “The foolish man seeks happiness in the distance, the wise man grows it under his feet.” – James Oppenheim WEEKLY TIP               In your fifties, make sure to check up on your retirement goals. Does it appear you have viable financial paths to achieve them? Test out different financial scenarios (with professional input) to see if your retirement strategy may need adjusting.   WEEKLY RIDDLE              I descend softly, fade away gently, change the color of the ground, but I never go up the way I come down. What am I?       Last week’s riddle: It is a word in the English language, written using only two letters of the alphabet. You can say this word merely by using one letter of the alphabet, and that letter is a vowel. What word is this?   Last week’s answer: Eye.           May 30, 2016     TWO HOUSING INDICATORS HIT MULTIYEAR HIGHS While monthly real estate indicators are often later revised, the latest numbers for new home buying and pending home sales are impressive, indeed. The Census Bureau reported a 16.6% jump in new home sales in April, putting them at an 8-year peak. Housing contract activity surged 5.1% last month, according to the National Association of Realtors, reaching a level unseen since February 2006. The Wall Street Journal had forecast just an 0.7% April gain for the NAR’s pending home sales index.1      Q1 GDP REVISED UP; DURABLE GOODS ORDERS UP 3.4% How much did the economy grow in the first quarter? In the second estimate...