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Money Talk Podcast, Friday Dec. 23, 2016

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Landaas & Company newsletter December edition now available.

Advisors on This Week’s Show

Bob Landaas

Kyle Tetting

Art Rothschild

Dave Sandstrom

(with Max Hoelzl)

Week in Review (December 19-23, 2016)

Significant economic indicators & reports

Monday

No major announcements

Tuesday

No major announcements

Wednesday

The annual sales rate of existing houses rose more than analysts expected in November, for third rise in as many months. The National Association of Realtors reported an annual rate of more than 5.6 million houses sold, up 15% from November 2015. The trade group cited a strong job market and rising mortgage rates for increased demand but repeated concerns that housing prices will continue rising faster than incomes. The inventory of houses for sale has declined from the year before for 18 consecutive months.

Thursday

The U.S. economy grew more than previously estimated in the third quarter, up an annual rate of 3.5%, the fastest in two years, according to the Bureau of Economic Analysis. Consumer spending, which drives more than two-thirds of U.S. economic activity, rose at a healthy clip of 3% in the quarter, following a 4.3% pace in the second quarter. The report showed gross domestic product benefiting from greater business investment than was initially estimated.

In a separate release, the Bureau of Economic Analysis show personal spending slowing in November after October’s pace was brisker than previously reported. The slowdown came as wages and salaries declined in November. As a result, the personal saving rate fell to 5.5% of disposable income. In the same report, the Federal Reserve’s favorite measure of inflation showed a 1.6% year-to-year increase, the lowest since July.

The Fed’s target is 2%.

Employers continued to be reluctant to let workers go, as indicated in the moving four-week average for initial unemployment claims. The average rose for the fourth consecutive week, according to data from the Labor Department, but it remained 26% below the 49-year average level, which it has been below each week since the beginning of 2013.

The Conference Board said its index of leading economic indicators declined stayed unchanged in November, despite analyst expectations of a slight gain. An economist for the business research group said that based on the index, the U.S. economy should continue its moderate growth into the first half of 2017. Employment, stock market and interest rate indicators offset a drag from weak manufacturing and construction data.

November orders for durable goods declined for the first time in five months. Excluding transportation equipment, orders rose, the Commerce Department said, and civilian capital goods orders minus aircraft – an indicator of business investments – improved for the third month in a row. Lack of business investment has been cited as a factor in low U.S. productivity.

Friday

As further evidence of the ongoing uneven housing recovery, new home sales in November reached the second-swiftest pace since before the recession, rising 5% from the October rate and 16% from the year before. While still trending below long-term levels, the number of new sales rose to an annual rate of 592,000 houses in November, the Commerce Department reported. The recovery peak pace was 622,000 in July.

Consumer sentiment rose more than expected in December, according to the long-standing monthly survey from the University of Michigan. Economists see sentiment as an leading indicator of consumer spending.

Where the Markets Closed for the Week

  • Nasdaq – 5,463, up 26 points or 0.5%
  • Standard & Poor’s 500 – 2,264, up 6 points or 0.3%
  • 10-year U.S. Treasury Note – 2.54%, down 0.06 point
  • Dow Jones Industrial – 19,843, up 91 points or 0.5%

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