Money Talk Podcast, Friday June 15, 2018
Landaas & Company newsletter June edition now available.
Advisors on This Week’s Show
(with Max Hoelzl and Joel Dresang)
Week in Review (June 11-15, 2018)
SIGNIFICANT ECONOMIC INDICATORS & REPORTS
No major announcements or releases
The broadest measure of inflation edged up in May, led by gasoline prices. The Consumer Price Index rose 0.2%, the same gain as in April, but gas prices rose 1.7%. The core CPI, which excludes volatile food and energy prices, also rose 0.2%. On a more telling year-to-year measure, core inflation rose 2.2%, the highest since January 2017, according to the Bureau of Labor Statistics.
The Bureau of Labor Statistics said wholesale inflation also rose in May, led by a 4.6% increase in energy prices. The Producer Price Index rose 3.1% from May 2017, the highest one-year climb in six years. Excluding costs of food, energy and trade services, the index rose 2.6% year-to-year. Steel and aluminum were among the products experiencing the biggest increases.
The four-week moving average for initial unemployment claims declined for the first time in four weeks after reaching its lowest point since late 1969. Labor Department data show the average level of jobless applications 37% below the 51-year average, which it has been below each week for more than five years. The indicator suggests continued reluctance by employers to let go of their workers in a strong hiring market.
May retail sales rose more than analysts expected with broad gains across categories, led by gas stations. According to the Commerce Department, only two of 13 categories had decreased sales from April. The outliers included furniture stores and sporting goods stores. Gas station sales rose 2%. Year-to-year, overall sales rose 5.9%, above the long-term average of 4.3%.
In a separate report, the Commerce Department said business inventories rose 0.3% in April while sales increased 0.4%. As a result, the ratio between inventories and sales nudged down. Rising inventories help increase the gross domestic product, but the lower ratio suggests companies are managing to keep supplies are more line with demand. Year-to-year, inventories rose 4.4% and 6.7% for sales.
The Federal Reserve reported that industrial production declined 0.1% in May as manufacturing output fell for the third time in five months. Lower automotive production led the factory setback. Output from mining and utilities continued to advance. The same report showed capacity utilization down slightly from April. The utilization rate was 77.9%, which is below the 46-year average of 79.8% and suggests inflation is not an imminent threat.
The University of Michigan said its preliminary consumer sentiment index for June rose because of increased contentment with current economic conditions. Consumers expressed lower expectations for the months ahead, but their sentiment overall increase based on optimism in the job market and on personal finances. Economists see consumer sentiment as a harbinger of consumer spending, which drives about 70% of U.S. economic activity.
Where the Markets Closed for the Week
- Nasdaq – 7,746, up 101 points or 1.3%
- Standard & Poor’s 500 – 2,779, unchanged
- 10-year U.S. Treasury Note – 2.91%, down 0.03 point
- Dow Jones Industrial– 25,090, down 227 points or 0.9%