A lot of financial data and information is tossed around in the news, however mostly its confusing so people ignore it. To help you be more MoneyEducated, each Friday I post information that I find most helpful to personal finances. I have been doing this for a year, and this has gone from just stock market and mortgage rates to now: 8 indicators of the financial markets, and 10 economic indicators.

At-a-glance summary: FINANCIALS: Stock market continued to loose, mortgage rates, gold and government bonds dropped more, and oil popped up a little. Gasoline prices shouldn’t change too much, your stocks probably took a beating, but there might be some buying opportunities. It’s still a great time to refinance home mortgages. RECESSION WATCH: stagnant economy with consumer spending dropping, high unemployment not showing much improvement, jobless claims are trending up, slow GDP growth, manufacturing output down, and high Federal budget deficit and national debt. Friday to Friday, week-ending rates as of 11/16/12, 4:30pm EST:

  • Mortgage Rates MIXED: 30-year last/this week: 3.41%/3.42%, 15-year 2.83%/2.82%
  • Dow Jones Industrial Average of 30 companies DECREASE from 12,815 to 12,588 (highest all time 14,164 10/9/07)
  • S&P 500 DECREASE from 1379 to 1359 (all time 1565 10/9/2007)
  • US Treasury’s DECREASE: 2-Year Note from .266% to .246%, 10-Year from 1.611% to 1.579%
  • Crude Oil Futures INCREASE from $86.06 to $86.62
  • Gold prices DECREASE from $1,730 to $1,713 (High $1,895 9/6/11) per ounce
  • Euro INCREASE from 1.2713 to 1.2743 (2011 high 1.48 5/11, all time 1.59 7/2008)
  • US Dollar Index INCREASE from $81.05 to $81.20

RECESSION WATCH

Unemployment, New Jobs, and Jobless Claims Statistics:*

  • Negative: Unemployment INCREASED in October to 7.9% from 7.8% in September: September’s was the lowest rate since January 2009, and was good improvement over August’s 8.1%, so this shows things are really remaining about the same. However, keep in mind this ‘Official Unemployment’ rate only tracks those who are without jobs and have actively sought work within the past 4 weeks. Since this statistic does not track all people who are not working, some websites report that the ‘Real Unemployment’ rate is about 15% when all able-bodied people of working age are considered. For a historical perspective: The unemployment rate during the Great Recession peaked at 10.10% in October 2010. In 2012 it has varied in the range of 8.10% – 8.30%, so we are not seeing a lot of change this year. It could be worse when you consider that during the Great Depression it peaked at about 25% in 1933.
  • Positive: Monthly change in non-farm payrolls INCREASED: 171,000 new jobs were added in October, compared to 114,000 new jobs in September.
  • NEGATIVE: Initial Jobless Claims for Unemployment Insurance INCREASED to 439,000: Maybe directly related to Hurricane Sandy, it really increased for the week, pulling the 4 week rolling average up to 383,750 from 372,000. Looking back 12 weeks, the average was 371,000; 6 weeks ago it was 364,750, so we seeing more of a trend of an increase in this year. This number is much better than it was in 2009 when it peaked at over 650,000. In 2010 we saw a decrease from nearly 500,000 early in the year to the low 400,000′s. In 2011 the claims were in the low to mid 400,000′s, but since October of 2011 they have been below 400,000, until this week. The lowest we have seen this rate in 10 years is 282,000 in January of 2006, and the earlier part of the last decade we saw the average similar to what we are seeing now. During the Great Depression from 1929 – 1941 there was not the same level of unemployment insurance that we have today, although unions may have had some. It wasn’t until the Social Security act encouraged it in 1935. Today we have the Federal Unemployment Tax Act (FUTA) tax to fund state agencies.
Financial Indicators:**
  • NEGATIVE: Manufacturing output is a good indication of how industry is doing; it was modestly increasing this past winter, leading to some guarded optimism, but for almost the last 6 months it has decreased to Spring 2009 levels.
  • NEGATIVE: Gross Domestic Product (GDP) tracks the size of our economy by calculating the total dollar value of all goods and services produced over a specific time period in comparison with the previous quarter. GDP growth was at 4.1% about 9 months ago, this year slumping to 2% in the first quarter, and 1.3% for the second quarter.
  • NEGATIVE: US Consumer Spending is currently at 66 compared to peaks this year of 96 in March, 84 in October, and 66 a year ago. Economists watch consumers’ spending trends to try to track their confidence in the economy. The more confidence consumers have, the more willing they are to spend money.
  • POSITIVE: US Household Debt Service as a percentage of people’s disposable income is at 10.69% (June) and has been steadily decreasing from its 10 year high of about 14% in the 3rd quarter of 2008.
  • NEGATIVE: The Federal Deficit for 2013 is projected by the Congressional Budget Office to be $1.1 trillion for 2013; this will make 5 years in a row it has exceeded $1 trillion, and this doesn’t include all the money our Federal government borrows.
  • NEGATIVE: The US National debt exceeds $16.1 trillion.
  • POSITIVE: Consumer Price Index - CPI for October annualized monthly growth rate was 1.75%. The long term-term average annualized rate of 3.63%. The CPI is the most common indicator of inflation. November 2012 CPI data are scheduled to be released on December 14.

*Unemployment statistics are an important indicator of how our economy is doing; more people employed points to stronger business growth and to fewer people receiving government entitlements. However, this is a little difficult to track, since the government doesn’t really publish a combined statistic that truly indicates what is happening. Most people who study this issue follow these three indicators: percentage of people unemployed, monthly change in non-farm payrolls, and jobless claims for unemployment insurance. The most discussed statistic is the unemployment rate; reading the explanation above illustrates how this number falls short.

**Technically a recession occurs when business cycles retract, evidenced by down consecutive quarters of GDP, or a 12 month 1.5% or more rise in unemployment.