A&I Financial Services Periscope

A & I Financial Services LLC Newsletter

For the Week of
April 7, 2011
 
Here are a couple of interesting stats that explain some of the squeeze we feel in America today. The life expectancy at birth of an American male is 75.7 years today, an increase of 10.1 years since 1950.  The life expectancy at birth of an American female is 80.6 years today, an increase of 9.5 years since 1950 (source: National Center for Health Statistics).   However, the normal retirement age (NRA) has not increased. NRA in 2011 to be eligible for full Social Security benefits is 66 years.  The NRA in 1950 to be eligible for full Social Security benefits was 65 years (source: Social Security).

The Unemployed Spend Less
The jobs picture is improving, and should continue to improve in the months and years ahead. Job losses in this last recession were more severe than during most other recessions. So far, the recovery in jobs has been much slower. As Chart 3 shows, the job market is more stressed in this recovery than it has been in the recoveries since World War II.
  

Chart1

The headline rate for unemployment fails to capture some of the stresses from the very weak labor market we've been experiencing, one of which is that some people have been out of work for so long that they've given up looking. This actually contributes to a drop in the official unemployment rate. Some of these individuals will see their skills erode to the point where they become unemployable in their prior profession, a problem termed "structural unemployment." Still others are underemployed, in part-time jobs or at lower level positions than they are qualified for. At even optimistic levels of job growth it will take many years to return to full employment, which is considered an unemployment rate of 5%.
  
Jobs are critically important from an economic perspective.  Simply put, someone without work has fewer dollars to spend. (1)
Economic Briefs

 

JOBLESS RATE DOWN 1% SINCE NOVEMBER

In March, the nation's jobless rate declined to 8.8%. That is the lowest level of unemployment since April 2009 and represents a 1.0% reduction in unemployment in the last four months. The Labor Department said the economy added 216,000 jobs in March, 78,000 in the category of professional and business services. (2,3)


CONSUMER SPENDING UP 0.7%
Personal spending increased for the eighth month in a row in February, but Commerce Department data showed that much of the gain went to pay for higher food and energy costs. The Personal Consumption Index (PCE) advanced 0.4% for the month. So the inflation-adjusted gain in personal spending was 0.3%. Wages rose by 0.3% in February. (4)


ISM: MANUFACTURING GROWTH MODERATES
The March PMI index from the Institute for Supply Management showed a slight reduction in the pace of the sector's growth: it came in at 61.2 versus February's 61.4 mark. However, the index has recorded 20 straight months of sector expansion. (5)


IN REAL ESTATE, SOME MIXED NEWS
The National Association of Realtors said that pending home sales rose 2.1% in February. The number of contracts for existing home purchases was still down 8.2% from a year ago. In January, the S&P/Case-Shiller home price index fell 1.0% from its December level; if it slips another 1.2%, it will fall below its April 2009 trough, which would signal the dreaded "double dip". (6,7)


STOCKS ADVANCE FOR THE WEEK & QUARTER
How did the big indices do last week? DJIA, +1.28% to 12,376.72; S&P 500, +1.42% to 1,332.41; NASDAQ, +1.70% to 2,789.60. In the first quarter, the DJIA gained 6.41%, the NASDAQ 4.83% and the S&P 500 5.42%. (8,9)

 

Market Summary

% Change

Y-T-D

1Yr Chg

5-Year Avg

DJIA

+6.90

+13.27

+2.28

NASDAQ

+5.15

+16.11

+3.84

S&P 500

+5.95

+13.10

+0.58

(Source: cnbc.com, bigcharts.com, treasury.gov, treasurydirect.gov - 4/1/11)
Create a beautiful week!

Karl Frank, MBA, MSF
Certified Financial Planner (R)
A & I Financial Services LLC
303.690.5070
 

Citations:
(1) - http://www.advisorintelligence.com/portfolios/currentinvestm
entstrategy.aspx
(2) - bls.gov/news.release/pdf/empsit.pdf [4/1/11] 
(3) - miamiherald.com/2011/04/01/2145890/jobless-rate-drops-to-2-year-low.html [4/1/11]
(4) - reuters.com/article/2011/03/28/us-economy-consumer-idUSTRE72R2OI20110328 [4/1/11]
(5) - ism.ws/ISMReport/MfgROB.cfm [4/1/11]
(6) - kansascity.com/2011/03/28/2758961/pending-home-sales-rise-in-february.html [3/28/11]
(7)- blogs.barrons.com/stockstowatchtoday/2011/03/29/home-prices-consumer-confidence-fall/ [3/29/11]
(8) - cnbc.com/id/42381611 [4/1/11]
  
This material has been prepared and is distributed solely for information purposes only. It is not a solicitation or an offer buy any securities or instrument or to participate in any trading strategy. There is no assurance that a particular trading strategy will achieve investment success.

 

Certain material in this work is proprietary to and copyrighted by Litman/Gregory Analytics and is used by A & I Financial Services LLC with permission. Reproduction or distribution of this material is prohibited and all rights are reserved. 

  
Securities offered through Geneos Wealth Management, Inc., member FINRA/SIPC.  Investment advisory services offered through A & I Financial Services LLC, registered investment advisor.
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 Beating the Recession
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FPA Week
Riddle of the Week
  
Two children are born in the same hospital (and in the same hospital room) on the same year, month, day and minute. They have the same two parents, yet they are not referred to as twins and have no brothers. How is this possible?
   

Last week's riddle:

 

A woman sailed into the Bahamas with her boat on the 28th of April. She stayed in the Bahamas for three weeks and then left in April. How is this possible?

     

Last week's answer:

 

 She sailed to and from the Bahamas in a boat named April.