Weekending Financial Scorecard, 2/22/13
Here’s the most important financial data that you need to know to be fairly well informed. Each Friday evening I post the data of 8 financial market’s, and 10 economic indicator’s weekending scorecard. As of 2/22/2013:
FINANCIALS: The Dow finished the week above 14,000, S&P stayed above 1500 but it dropped a little. Gold prices dropped a good bit again, and oil lowered a little too- maybe good for gasoline prices although you wouldn’t know it as this moment going to the pump. Another Recession Coming?* A few months ago, it was looking like a double-dip recession was likely for 2013, however I’m now thinking this might be avoided, but it is too early to tell since things are still sluggish. I like the slightly good employment news, a little uptick in consumer spending vs last year, and better sales in real estate and automotive. On the negative side manufacturing output remains down, GDP dropped and we still have a high Federal deficit and debt and unproductive Federal government to put forth a balanced budget.
- Mortgage Rates DECREASE: 30-year last/this week: 3.67%/3.64%, 15-year 2.93%/2.88%
- Dow Jones Industrial Average INCREASE from 13,981 to 14,000 (avg. of 30 companies, highest all time 14,164 10/9/07)
- S&P 500 DECREASE from 1519 to 1515 (all time 1565 10/9/2007)
- US Treasury’s DECREASE: 2-Year Note from .282% to .266%, 10-Year Note from 2.010% to 1.966%
- Crude Oil Futures DECREASE from $95.95 to $93.39
- Gold prices DECREASE from $1,607 to $1,580 (High $1,895 9/6/11) per ounce
- Euro DECREASE from 1.3362 to 1.3184 (2011 high 1.48 5/11, all time 1.59 7/2008)
- US Dollar Index INCREASE from $80.47 to $81.43
RECESSION WATCH SCORECARD: *
FINANCIALS:* 4 NEGATIVE vs 3 POSITIVE
- Gross Domestic Product (GDP) - Negative, early estimates of real GDP decreased -.1% in the fourth quarter of 2012, the first time in more than 3 years. The economy grew 2.2% in 2012 up from 1.8% in 2012. This is an early estimate, and 2/28 a more complete estimate will be published. We really need to see GDP in the 4% – 6% range to have a fueled economic recovery. From 1947 – 2012 it has averaged 3.23,
- Manufacturing output - Negative, this is a good indication of how industry is doing; it was modestly increasing a year ago, leading to some guarded optimism, but for the balance of 2012 it decreased.
- US Consumer Spending - Positive, is currently at 86 compared to peaks last year of 96 in March, and 638one year ago. Overall the past 12 months has not been strong, holiday spending was down, however this year we are starting to see an uptrend. 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.
- US Household Debt Service - Positive, 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.
- The Federal Deficit - Negative, 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.
- The US National debt - Negative exceeds $16.5 trillion.
- Consumer Price Index - Positive annualized growth rate through December for the CPI in 2012 was 1.70%, compared to 3.0% in 2011. The long term-term average annualized rate of 3.63%. The CPI is the most common indicator of inflation.
JOBS: 2 POSITIVE, 1 NEGATIVE
- Monthly change in non-farm payrolls – Positive: 157,000 new jobs were added in January, compared to 155,000 added in December.
- Unemployment – Negative: January’s rate of 7.9 increased from December’s 7.8%. This is better than some months in 2012 of over 8% – showing very little improvement. 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.
- Initial Jobless Claims for Unemployment Insurance – Positive: The four week average has been hovering around 360,000 for about 9 weeks, this is a little improvement. Looking back 52 weeks it averaged about 373,000, we are seeing a slight improvement on that number too. This number is much better than it was in 2009 when it peaked at over 650,000, better than 2010 when it went from nearly 500,000 to the the low 400,000′s and for 2011 when claims were in the low to mid 400,000′s. 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.
*For an overview of GDP, Unemployment and Recession indicators, see previous article A primer on recession indicators, Gross Domestic Product and Unemployment.