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Money Talk Podcast, Friday Aug. 12, 2016

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Landaas & Company newsletter  August edition now available.

Advisors on This Week’s Show

Brian Kilb

Marc Amateis

Art Rothschild

(with Joel Dresang and Max Hoelzl)

Week in Review (August 8-12, 2016)

Significant economic indicators & reports

Monday

No major releases

Tuesday

The Bureau of Labor Statistics reported lower productivity for the third consecutive quarter, the longest decline in more than 68 years of data. For the three months ended June 30, productivity fell at an annual rate of 0.5% as output increased 1.2% but hours worked rose 1.8%. Since the second quarter of 2015, productivity fell 0.4% – the first four-quarter decline in three years. Some analysts say a lack of investment in advanced technology is costing businesses efficiency.

Wholesalers continued adjusting supply levels to customer demands in June as the inventories-to-sales ratio declined for the second month in a row. The Commerce Department said wholesale inventories gained 0.3% from May, vs. a 1.9% rise in sales. Year-t0-year, inventories were up 0.2% while sales were down 0.4%.

Wednesday

American employers had 5.6 million job openings in June, up 2% from May, though still behind the all-time high of 5.8 million in April. Hiring rose 1.6% in June, according to the Bureau of Labor Statistics report. Most numbers – including the rate of workers quitting their jobs, a gauge of employment confidence – were little changed from the previous month and continued to suggest a healthy job market.

Thursday

The moving four-week average for initial unemployment claims rose for the second week in a row, though remaining below the 300,000 level for the 75th consecutive week. Labor Department data showed further evidence of an encouraging employment market in which employer reluctance to let go of their workers is historically persistent.

Friday

Inflation on the wholesale level declined 0.2% year-to-year in July, a reminder of the fragility of America’s moderate economic growth. The Bureau of Labor Statistics said that even excluding volatile food and fuel costs, the Producer Price Index rose only 0.7% from July 2015. Lack of inflation is one sign of economic weakness that has allowed the Federal Reserve to continue keeping interest rates near record lows. The Fed has said it would like to see inflation around 2%.

A key measure of consumer spending – retail sales – was unchanged in July after gaining more than initially reported in June. The Commerce Department reported that only five of 13 retail categories had higher sales in July. A bright spot was a 1.1% rise in automotive sales. Excluding that volatile category, retailers suffered a 0.3% setback in July. Overall sales gained 2.6% from July 2015, vs. a 3% rate in June and an average of more than 4% for the last 20 years. Consumer spending accounts for more than two-thirds of U.S. economic activity.

Business inventories rose 0.2% in June, lagging a 1.2% increase in sales, according to a separate Commerce Department report. As a result, the inventories-to-sales ratio declined for its lowest level in 10 months.

The University of Michigan said a preliminary survey of consumer sentiment for August suggests a relatively healthy 2.6% increase in consumer spending over the next year. The university’s index showed rising confidence both in current economic conditions and in near-term expectations. Respondents expressed encouragement over low mortgage rates at some of the highest levels in a decade.

Where the Markets Closed for the Week

  • Nasdaq – 5,233, up 12 points or 0.2%
  • Standard & Poor’s 500 – 2,184, up 1 point or 0%
  • 10-year U.S. Treasury Note – 1.51%, down 0.08 point
  • Dow Jones Industrial – 18,576, up 33 points or 0.2%

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