Money Talk Podcast, Friday Oct. 2, 2015
Landaas & Company newsletter October edition now available.
Advisors on This Week’s Show
Week in Review (Sept. 28-Oct. 2, 2015)
Significant economic indicators & reports
Personal spending, a keystone to the U.S. economy, grew 0.4% in August, the Bureau of Economic Analysis reported. Spending outpaced income, which rose 0.3%. The personal saving rate dropped slightly to 4.6% of disposable income. A key inflation measure watched by the Federal Reserve showed a 12-month rate of 1.3%, excluding volatile fuel and food prices, still below the Fed target of 2%.
Year-to-year, U.S. house prices increased 5% in July, based on the S&P/Case-Shiller home price index. That was lower than analysts expected but up from the 4.9% gain in June. Prices rose in all 20 cities in the composite index, with 14 recording higher gains than in June. Housing’s recovery has been a meaningful contributor to the U.S. expansion. An economist with the index noted that house prices keep climbing faster than inflation and that investments in residences, furniture and appliances are growing faster than the economy overall.
Consumer confidence rose in September to the highest point since an eight-year high in January, according to the Conference Board. Considered a gauge of future spending, the business research group’s index benefited from stronger feelings toward current economic conditions, despite recent stock market weakness. Consumer expectations for the next six months declined slightly, which could temper some spending plans.
No major releases or announcements
The Commerce Department said construction spending rose 0.7% in August, more than analysts expected. Compared to August 2014, spending increased 13.7%, led by residential, which makes up 36% of all construction expenditures. The report gave another indication that housing is helping the moderate U.S. economic growth.
Auto dealers sold an annualized rate of 18.2 million vehicles in September, according to Auto Data Corp. That was fastest pace since July 2005, 2% above the August pace and 10% higher than the year before. Truck sales continue benefiting from lower gas prices, and domestic vehicles sold more briskly than imports.
Manufacturing expanded less than in August or July, slowing to its lowest level since May 2013, according to the Institute for Supply Management. Although lower, the reading still indicated that industries were expanding for the 33rd month in a row. The exports component of the index contracted for the fourth consecutive month, reflecting the effects of the strong U.S. dollar and slowing growth in the global economy.
The Labor Department said the moving four-week average for initial unemployment claims dropped for the third week in a row, inching closer to its 15-year low in August. A leading indicator of unemployment, the average has stayed below the 48-year average since early 2013.
In another sign that manufacturing growth is slowing, Commerce reported that factory orders fell 1.7% in August, the first decline in three months. Even excluding the volatile transportation manufacturers, orders dropped for the second month in a row. Compared to last year at this time, factory orders excluding transportation dropped 6.7%.
American employers added fewer jobs than expected in September, at a lower rate than the 12-month average, and they hired 59,000 fewer workers in July and August than previously estimated. The Bureau of Labor Statistics said health care agencies, retailers and restaurants were among the places expanding payrolls. The average hourly wage dropped a penny, suggesting pay won’t be pushing inflation higher anytime soon. The unemployment rate stayed at 5.1%, the lowest since before the financial crisis in 2008.
Where the Markets Closed for the Week
- Nasdaq – 4,708, up 21 points or 0.4%
- Standard & Poor’s 500 – 1,951, up 20 points or 1%
- 10-year U.S. Treasury Note – 1.98%, down 0.19 point
- Dow Jones Industrial – 16,472, up 157 points or 1%