Money Talk Podcast, Friday March 22, 2019
Landaas & Company newsletter March edition now available.
Advisors on This Week’s Show
(with Max Hoelzl and Joel Dresang)
Week in Review (March 18-22, 2019)
Significant economic indicators & reports
No major announcements
In another sign that U.S. economic growth is slowing, factory orders rose just 0.1% in January, according to the Commerce Department. Excluding volatile orders for transportation items such as aircraft, demand for manufactured goods declined for the third month in a row. A measure of business investment increased for the second consecutive month after lagging overall factory orders for much of the 10 years since the Great Recession.
The policy-making body of the Federal Reserve Board decided to continue to put a hold on its plans to normalize short-term interest rates. The Federal Open Market Committee said it will be patient in its actions to gradually back off on the monetary stimulus it provided the U.S. economy since the recession. While noting that labor market indicators remain strong and that energy prices have kept inflation low, the Fed said overall economic activity has slowed since the end of 2018 in part because of weaker spending by consumers and businesses.
The four-week moving average for initial unemployment claims rose for the first time in four weeks. Jobless applications were 36% below the 52-year average, according to Labor Department data, suggesting that employers continue to be reluctant to let workers go. That persistent sentiment has been enhancing consumer confidence, which is important because consumer spending accounts for about two-thirds of U.S. economic activity.
The index of leading economic indicators rose 0.2% in February, the first gain in five months. Boosts occurred from improved stock market performance, credit indicators and consumer expectations, the Conference Board reported. Fewer factory hours and higher unemployment claims held the index back. Overall, the business research group suggested, the index suggests continued economic growth but at a slower pace.
The Commerce Department said wholesale inventories rose 1.2% in February, far outpacing analyst expectations as well as sales, which advanced 0.5%. Compared to February 2018, inventories grew 7.7%, while sales increased 2.7%, pushing the inventories-to-sales ratio to its highest level since late 2016. Rising inventories adds to gross domestic product—the chief measure of economic growth, but when inventories grow faster than sales, it suggests supply is outrunning demand.
Sales of existing houses grew for the first time in four months and at the fastest pace in four years, according to the National Association of Realtors. The seasonally adjusted annual rate of 5.51 million houses sold in February was 11.8% ahead of January’s pace but 1.8% behind February 2018. An economist for the trade group cited lower mortgage rates, more inventory, rising income and higher consumer confidence for the February gain. The association has forecast full 2019 sales of 5.28 million, which would be 1.1% shy of the 2018 final, which was the lowest since 2015.
Where the Markets Closed for the Week
- Nasdaq – 7,643, down 46 points or 0.6%
- Standard & Poor’s 500 – 2,801, down 22 points or 0.8%
- Dow Jones Industrial– 25,503, down 346 points or 1.3%
- 10-year U.S. Treasury Note – 2.46%, down 0.14 point