Weekly Economic Update January 8, 2018
“Whatever you think, be sure it is what you think; whatever you want, be sure that is what you want; whatever you feel, be sure that is what you feel.”
– T.S. Eliot
Retiring one year later means one extra year to save, one extra year for those savings to potentially grow and compound, one less year of retirement to fund, and one more year of living on work or business income.
The more of them you add, the less something will weigh. What are they?
Last week’s riddle:
It occasionally comes up in conversation, and it never goes down. What is it?
Last week’s answer:
LOW UNEMPLOYMENT, BUT LESS HIRING
The Department of Labor’s latest jobs report announced a headline unemployment rate of only 4.1% in December, but it also showed companies adding just 148,000 net new workers last month. Even so, net payroll growth averaged 204,000 during the last three months. In hiring terms, the health care sector grew more than any other industry in 2017, expanding by 300,000 jobs. Wages rose 2.5% last year. The broader U-6 jobless rate, encompassing the underemployed, ticked up a tenth of a point to 8.1%, which was still half a percent below its level of a year ago.1
MORE FACTORY ACTIVITY DURING THE HOLIDAYS
December saw U.S. manufacturers pick up their pace. The Institute for Supply Management’s purchasing manager index for the factory sector surprised to the upside with a fine reading of 59.7. Economists polled by Briefing.com had projected the PMI to decline 0.2 points to 58.0. ISM’s non-manufacturing PMI fell in December, weakening 1.5 points to a reading of 55.9.2
WTI CRUDE CONTINUES TO RALLY
Finishing at $61.41 on the NYMEX Friday, it advanced 1.7% last week. Investor concern over anti-government protests in Iran and stateside data showing smaller crude reserves helped. Oil settled at $62.01 Thursday, which was a peak unmatched in roughly three years.3
A SHORT, NOTEWORTHY WEEK STARTS THE YEAR
During January 2-5, the Dow Jones Industrial Average topped 25,000 and the Nasdaq Composite went above 7,000. The blue chips ended the week at 25,295.87; the Nasdaq, at 7,136.56; the S&P 500, at 2,743.15. The 4-day gains: Dow, 2.18%; Nasdaq, 3.35%; S&P, 2.50%. The CBOE VIX wrapped up the week down at 9.22.4,5
THIS WEEK: Nothing major is scheduled for Monday or Tuesday. On Wednesday, KB Home, Lennar, and Supervalu present earnings. The December Producer Price Index appears Thursday, plus a new initial claims report. Friday, a new earnings season starts off with announcements from BlackRock, Infosys, JPMorgan Chase, PNC Financial, and Wells Fargo, and three important economic indicators arrive for consideration – the December retail sales report from the Department of Commerce, the December Consumer Price Index, and the preliminary January consumer sentiment index from the University of Michigan.
|% CHANGE||Y-T-D||1-YR CHG||5-YR AVG||10-YR AVG|
|REAL YIELD||1/5 RATE||1 YR AGO||5 YRS AGO||10 YRS AGO|
|10 YR TIPS||0.46%||0.42%||-0.55%||1.56%|
Sources: finance.google.com, bigcharts.com, treasury.gov – 1/5/185,6,7,8
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.
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1 – forbes.com/sites/maggiemcgrath/2018/01/05/unemployment-rate-holds-steady-at-4-1-as-u-s-adds-148000-jobs-in-december/ [1/5/18]
2 – briefing.com/investor/calendars/economic/2018/01/01-05 [1/5/18]
3 – marketwatch.com/story/oil-prices-fall-losing-grip-on-3-year-high-2018-01-05 [1/5/18]
4 – markets.wsj.com/us [1/5/18]
5 – finance.google.com/finance?q=INDEXDJX:.DJI&ei=POlPWoHEE5eJjAHrvInABw [1/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F5%2F17&x=0&y=0 [1/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F5%2F17&x=0&y=0 [1/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F5%2F17&x=0&y=0 [1/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F4%2F13&x=0&y=0 [1/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F4%2F13&x=0&y=0 [1/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F4%2F13&x=0&y=0 [1/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F4%2F08&x=0&y=0 [1/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F4%2F08&x=0&y=0 [1/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F4%2F08&x=0&y=0 [1/5/18]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [1/5/18]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [1/5/18]
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