Money Talk Podcast, Friday Aug. 30, 2013
Advisors on This Week’s ShowMax Hoelzl and Joel Dresang)
Week in Review (August 26-30, 2013)
Significant economic indicators & reports
Slackened demand for manufactured items sent durable goods orders down 7.3% in July. A deep drop in commercial aircraft orders helped pull down the indicator, the Commerce Department said, but demand dropped even after excluding volatile transportation goods. A measure of business investments also declined – for the first time in five months.
U.S. home prices continued rising in June with year-to-year gains for the 13th month in a row, according to the S&P/Case-Shiller Home Price Index. For the second straight month, each of the 20 cities in the composite index registered higher prices than the year before. The margin of gains moderated slightly to 12.1%, suggesting slowing momentum for the housing recovery.
American consumers grew more optimistic than analysts had expected in August, according to the Conference Board’s consumer confidence index. The indicator dropped to its lowest point since November as expectations for the future fell and assessments of current conditions remained restrained. Consumers expressed their brightest outlook on income prospects in two years as they became cheerier about business and employment conditions six months hence. Their assessment of current conditions declined from July.
Another sign that housing’s turnaround is slowing came from the National Association of Realtors, which reported that pending sales of houses declined 1.3% in July. The year-to-year gain was 8.6%, higher than anticipated, but down from 9.1% in June. July marked the 27th consecutive month of 12-month sales gains.
The economy expanded at an annual rate of 2.5% in the second quarter, more than earlier estimated and up from 1.1% in the previous quarter, the Bureau of Economic Affairs reported. The Gross Domestic Product benefited from more exports and fewer imports and higher levels of consumer spending.
The moving four-week average for initial unemployment claims rose for the first time in seven weeks but was only 750 claims higher than the lowest level since before the Great Recession. Data from the Labor Department continue to indicate a reluctance among employers to let workers go.
Consumer spending rose less than analysts forecast in July for the first monthly increase since April, according to the Bureau of Economic Analysis. With such spending driving 71% of GDP growth, the gain supports continued economic expansion. Spending rose more than income for the month, resulting in the personal saving rate dipping to 4.2% of disposable income from 4.3% in June. Also, a key measure of inflation declined to an annual rate of 1.6%, the lowest since October and within the Federal Reserve’s target of 2%.
Consumer sentiment declined in August to its lowest reading in four months, down from a six-year high in July. The index from the University of Michigan/Thomson Reuters suggested weaker opinions of current conditions mixed with greater expectations for six months from now.
Where the Markets Closed for the Week
- Nasdaq – 3,590, down 68 points or 1.9%
- Standard & Poor’s 500 – 1,630, down 34 points or 2%
- 10-year U.S. Treasury Note – 2.82%, down 0.04 point
- Dow Jones Industrial– 14,810, down 201 points or 1.3%