Economic Update, October 16, 2017

  Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “The ordinary acts we practice every day at home are of more importance to the soul than their simplicity might suggest.” – Thomas Moore WEEKLY TIP               If you are past 50 and you worry that your retirement savings are insufficient, the best financial response may be to work longer. Even working part time for a few more years could lessen the need to draw down your retirement money. WEEKLY RIDDLE              A Saab travels along an avenue at 50mph; a Subaru, at 30mph. The Subaru passes by the Saab, without speeding up to do so. How is this possible?         Last week’s riddle: Christine wants to know how far she can hike into a rugged badlands that is 6 miles wide. How far can she possibly go into the badlands?      Last week’s answer: 3 miles. If she hikes in any further, she will actually begin to hike out.           October 16, 2017     RETAIL SALES, SENTIMENT NUMBERS IMPRESS Two economic indicators stood out last week. Retail purchases rose 1.6% during September as households and businesses replaced cars and trucks damaged in hurricanes. This was the best monthly advance recorded by the Department of Commerce since March 2015, and the gain was 1.0% even with auto buying removed. The University of Michigan’s initial October consumer sentiment index displayed a reading of 101.1, which was nearly a 14-year high. Economists polled by Briefing.com had forecast just a half-point improvement to 95.6.1,2   GAS PRICES DRIVE UP INFLATION A 13.1% spike in retail gasoline costs accounted...

Economic Update, October 9, 2017

  Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     “Never let the future disturb you. You will meet it, if you have to, with the same weapons of reason which today arm you against the present.” – Marcus Aurelius WEEKLY TIP Your household may want to budget by the 50/20/30 rule: 50% of take-home pay assigned to fixed monthly costs, 20% to saving/investing, and 30% to flexible consumer expenses. WEEKLY RIDDLE Christine wants to know how far she can hike into a rugged badlands that is 6 miles wide. How far can she possibly go into the badlands? Last week’s riddle: Michael is asked to use only the numeral 4 four times to make an equation that equals 17. How does he do it? Last week’s answer: [4 ÷ 4] + [4 x 4] = 17.           October 9, 2017     HURRICANES HURT SEPTEMBER JOB NUMBERS For the first time in seven years, the economy went a month without payroll growth. The Department of Labor’s September employment report revealed the impact of Hurricanes Harvey and Irma: it showed 33,000 fewer people working. Average hourly wages rose 0.5% to take the annualized gain to 2.9%, but this may have been an effect of the net loss of 105,000 lower-paying bar and restaurant jobs. In a statistical fluke, the headline jobless rate fell to 4.2%, and the U-6 rate, counting the underemployed, declined to 8.3%, even as slightly more Americans looked for work.1 ISM FACTORY PMI TOPS 60 Rising 2.0 points for September, the Institute for Supply Management’s factory purchasing manager index hit 60.8, its best mark since May 2004. ISM’s service...

Economic Update, October 1, 2017

Untitled Document Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “A man’s silence is wonderful to listen to.” – Thomas Hardy WEEKLY TIP               When a grandparent, relative or friend of the family pays for a child’s medical expenses that are not covered by insurance, direct payments to doctors for such costs are not considered gifts to the child and do not count against the annual gift tax exclusion amount (currently $14,000). WEEKLY RIDDLE              Michael is asked to use only the numeral 4, four times, to make an equation that equals 17. How does he do it?         Last week’s riddle: A 6-foot chain is suspended with its ends nailed to a wall, with the nails parallel to the floor. The chain sags and hangs down between the nails; the height of the hanging chain is therefore 3 feet from top to bottom. What is the distance in between the nails?      Last week’s answer: No distance at all, they are next to each other.           October 2, 2017     PERSONAL SPENDING BARELY IMPROVES Consumer spending increased by only a seasonally adjusted 0.1% in August, while consumer incomes rose 0.2%. Those gains precisely matched the projections of economists surveyed by the Wall Street Journal. Factoring in inflation, household spending actually retreated 0.1% during August. Hurricane Harvey may be partly to blame for these numbers.1   ROUNDING UP REAL ESTATE INDICATORS Census Bureau data shows new home buying down 3.4% in August; this dip comes on the heels of a (revised) 5.5% fall in July. Pending home sales, as measured by a National Association...

Economic Update, September 25, 2017

Untitled Document Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “Price is what you pay. Value is what you get.” – Warren Buffett WEEKLY TIP               Are your antiques and collectibles worth more than they used to be? Their current value should be accurately stated on your homeowner insurance policy. Otherwise, an insurer may not reimburse you for their full value if they are lost or damaged. WEEKLY RIDDLE              A 6-foot chain is suspended with its ends nailed to a wall, with the nails parallel to the floor. The chain sags and hangs down between the nails; the height of the hanging chain is therefore 3 feet from top to bottom. What is the distance in between the nails?         Last week’s riddle: Take three letters, arrange them one way, and you have a word for “conflict.” Arrange them another way, and you have a word for “uncooked.” What are the three letters?      Last week’s answer: A, R, and W.           September 25, 2017     FEDERAL RESERVE: UNWINDING WILL BE GRADUAL Last Wednesday, the country’s central bank detailed how it would shrink its mammoth balance sheet. During the fourth quarter, the Fed will unload $10 billion of maturing bonds per month; in each subsequent quarter, the monthly runoff will increase by $10 billion until reaching a limit of $50 billion. Fed chair Janet Yellen said that this schedule is set in stone, barring a “sufficiently great” economic threat. The Fed made no interest rate move last week, but 12 of 16 Fed officials do project a hike before 2017 ends.1   HOME...

Economic Update, September 18, 2017

Untitled Document Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “People need to be reminded more often than they need to be instructed.” – Samuel Johnson WEEKLY TIP               Did you just get a raise or a promotion? Beware of lifestyle creep – the tendency to spend more when you make more. Be sure to direct appropriate amounts of your increased income into savings and investments. WEEKLY RIDDLE              Take three letters, arrange them one way, and you have a word for “conflict.” Arrange them another way, and you have a word for “uncooked.” What are the three letters?         Last week’s riddle: I walk and run on all fours, and I laugh while stalking my prey, but I seldom go in for the kill. What animal am I?      Last week’s answer: A hyena.           September 18, 2017     INFLATION SPIKED IN AUGUST Economists had long assumed consumer prices would rise abruptly at some point, and they certainly did last month. The Consumer Price Index increased 0.4% in August, its biggest one-month advance since its 0.6% gain in January. Higher gas prices were a major influence: they rose 6.3% for August. Core inflation was up 0.2% after four straight 0.1% monthly gains. Yearly consumer inflation is now at 1.9%. Wholesale inflation, as measured by the Producer Price Index, rose 0.2% in August to an annualized pace of 2.4%.1,2   RETAIL SALES STAGE A LATE-SUMMER RETREAT Americans cut back on retail purchases during August. Retail sales declined 0.2%, a disappointment after the 0.3% July gain. The silver lining: the core number, minus gasoline and...

Economic Update, September 11, 2017

Untitled Document Phillip Allen Inc.   WEEKLY ECONOMIC UPDATE     WEEKLY QUOTE                “An unhurried sense of time is in itself a form of wealth.” – Bonnie Friedman WEEKLY TIP               Grandparents might want to look at this potential tax break: two-thirds of U.S. states offer a state income tax deduction for contributions to a 529 college savings plan. Grandparents are eligible to claim such a deduction if they live in the state hosting the plan. WEEKLY RIDDLE              I walk and run on all fours, and I laugh while stalking my prey, but I seldom go in for the kill. What animal am I?         Last week’s riddle: What has a neck, yet no head?         Last week’s answer: A bottle.           September 11, 2017     EQUIFAX BREACH MAY IMPACT 44% of AMERICANS Thursday evening, credit reporting agency Equifax disclosed that hackers had raided its databases this spring, accessing the personal information of up to 143 million people. Equifax believes that about 209,000 credit card numbers may have been collected in the process, plus numerous Social Security and driver’s license numbers. Consumers can visit equifaxsecurity2017.com to see if they may have been affected by the breach. Equifax is offering a free year of identity theft insurance and credit monitoring for those at risk.1   SERVICE SECTOR EXPANDS FASTER At an August reading of 55.3, the Institute for Supply Management’s service sector purchasing manager index was 1.4 points improved from its July mark, indicating a quicker pace of expansion for non-manufacturing firms in the eighth month of the year. Readings above 50 indicate sector growth.2    ...

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