Economic Update

CPI SHOWS ANNUAL DEFLATION Dipping 0.7% in January, the Labor Department’s Consumer Price Index posted a 0.1% annual retreat – its first yearly decline since 2009. As the core CPI rose 0.2% in January and gas prices are moving north, the headline CPI’s stint in deflation territory may be short-lived. The federal government also announced…

GREECE DEAL, FED MINUTES REASSURE INVESTORS On Friday, Greece reached an agreement with eurozone finance ministers to extend its economic bailout through June. The four extra months of financial aid depend on reforms that the country will present to its creditors this week (they must be approved by April). Stateside, minutes from the Federal Reserve’s…

FOURTH QUARTER SAW 2.6% GROWTH Given the final 5.0% GDP reading for Q3, this initial Commerce Department estimate displeased many investors – even though the personal spending rate rose an impressive 4.3% in Q4. Investors also disliked the 3.4% overall dip in hard goods orders for December, which followed a 2.1% descent in November. HOUSEHOLDS…

A RISE IN HOME BUYING Existing home sales were up 2.4% in December and 3.5% for 2014. In its latest report, the National Association of Realtors noted a median sale price of $208,500, 5.8% above a year before. The sales pace in the last half of 2014 was 8% better than in the first half,…

ANOTHER GOOD JOBS REPORT America’s best year for hiring since 2000 wrapped up with 252,000 more people finding work in December. Labor Department data showed the jobless rate declining to 5.6% last month (the U-6 rate tracking the unemployed and underemployed decreased to 11.2%). The economy added 2.53 million non-farm payroll jobs in 2014, representing…

LATEST ISM FACTORY PMI IS A LETDOWN The 3.2-point December descent of the Institute for Supply Management’s manufacturing index may not be as troubling as it first appeared to Wall Street. Purchasing managers surveyed by ISM noted that labor disputes at west coast ports held up raw material and hard goods shipments last month. At…

THE ECONOMY IS BOOMING Looking at two vital indicators, it becomes hard to draw any other conclusion. In its final estimate, the Commerce Department put Q3 growth at 5.0% – the best quarterly GDP since Q3 2003, following a 4.6% expansion in Q2. Consumer spending was up 3.2% in the third quarter, business investment up…

ONE WORD TURNS STOCKS AROUND That word was “patient,” and it was found in the Federal Reserve’s December 17 policy statement. The Federal Open Market Committee again pledged to take “a considerable time” to raise interest rates in the absence of easing, but added that it would also be “patient” in making a move. At…

AMERICANS BUY MORE, SENTIMENT INDEX SOARS Commerce Department data showed retail sales jumping 0.7% for November – the best monthly advance recorded in a year. More good news came from the University of Michigan – its initial December consumer sentiment index came in at 93.8, way up from 88.8 at the end of last month.…

ECONOMY ADDS 321,000 JOBS November 2014 was the best month for hiring since January 2012. Analysts polled by MarketWatch had projected payrolls expanding by 235,000 jobs last month, and that forecast was trumped. While seasonal jobs constituted 50,000 of the new positions, professional and business hires comprised 86,000 more. The Labor Department also found average…