MARKET VIEW WEEKLY

Click link to download PDF

ECONOMIC REVIEW

• The ISM Services Index increased to 56.9 in August, easily beating the consensus expected 55.3. o Major activity levels moved mostly higher in July, with most standing north of 50, signaling expansion. o New Orders and Business Activity, the two most forward-looking sections of the report, rose 1.9 and 1.0 to 61.8 and 60.9, respectively. o The Suppliers Deliveries index fell 3.3 to 54.5, continuing its downward trajectory, hitting its lowest level before COVID began.

• Initial Jobless claims fell to a 3.5-month low of 220,000, beating expectations of 235,000. o Layoffs remain around record lows, with new jobless claims dropping for four consecutive weeks. o Continuing claims rose by 36,000 to 1.45 million, remaining near a 50-year low.

• International Trade balance came in at $70.7 billion in July, just above the expected $70.2 billion consensus. o July’s trade deficit fell 12.6%, marking a nine-month low. o Exports rose by $500 million, led by nonmonetary gold, autos, and crude oil. o Imports declined by $9.7 billion, led by pharmaceuticals and toys, games, & sporting equipment. How does this Economic news impact you?

• The ISM Services report delivers an encouraging message that the US economy is not in a recession, as the headline index accelerated to 56.9, and the underlying details of the report were very healthy. • The number of people applying for jobless benefits is one of the best barometers of economic conditions. • The International trade balance report supports the notion that US consumers have a diminishing appetite for imports; additionally, a strong dollar is making foreign goods less expensive to buy

General News, Monthly Market Update, Newsletter, Timely Topics, Weekly Market UpdateMelissa MinterSeptember 13, 2022

Overview

Click here to download PDF

The year began with the government stymied by a shutdown, and ended with articles of impeachment levied against the president. In between, both domestic and global economies showed signs of slowing, all while the trade war between the United States and China loomed throughout the year. Nevertheless, investors remained relatively bullish toward stocks, pushing several major indexes to record highs.

While domestic economic growth may have slowed in 2019 compared to 2018, it showed resilience and stamina. The third-quarter gross domestic product expanded at an annualized rate of 2.1% — moderately down from 2018's 3.0% rate, yet still strong enough to outpace global economic growth by a considerable margin. Consumer spending — which accounts for about two-thirds of the U.S. economy — surged, buoyed by a strong labor market, near-record unemployment, solid wage growth, and a burgeoning stock market. All told, the domestic economic expansion continued into its 11th straight year, the longest run in U.S. history.

Last year saw trade disputes between the United States and several of its trade partners reach an accord, but the trade war with China roared. The world's two largest economies engaged in a tit-for-tat skirmish, with each country volleying tariffs on their respective imports at the expense of the exporting nation. Coincidentally, a limited deal was announced just before the holiday shopping season, with the U.S. agreeing to forgo new tariffs and China assenting to allow more U.S. agricultural imports. Further negotiations are presumed, but the relationship between the economic giants remains tenuous at best.

Not only did the ongoing trade war affect global economies, but it also impacted domestic business investment, industrial production, and exports. Part of the justification cited by the Federal Reserve for lowering interest rates three times last year was weakness in business fixed investment and exports. As of November, new orders for durable goods were down 1.3% from the same period in 2018, and business (nonresidential) investment fell 2.3% in the third quarter.

The new year begins with a strong stock market and solid economic growth. The Secure Act, passed in late December, should change the retirement planning (and saving) landscape to some extent. However, the Treasury budget deficit for fiscal 2019 (October 2018-September 2019) exceeded $980 billion — 26% higher than the 2018 fiscal-year deficit. The trade war with China may cool with more mutual concessions, or accelerate, which would continue to dampen global economic growth. The new year will begin with the impeachment process and end with November's presidential election. What happens in between is anyone's guess. Will unemployment and inflation remain low? Will stocks continue to experience growth? Will oil and gas prices moderate or surge? Will the domestic economy continue to accelerate, or suffer a setback? Can the world economy recover, or will it continue to stagnate? If nothing else, 2020 looks to be an interesting year.

News

MARKET VIEW WEEKLY

Overview

AZ, CA, CO, CT, ID, LA, NM, PA, TX, WI