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U.S. Economy Regains All Jobs Lost in the Recession
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Weekly Update - June 11, 2014
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Markets rallied for the third week in a row, sending stocks to new all-time highs on the back of a strong May jobs report. For the week, the S&P 500 rose 1.34%, the Dow gained 1.24%, and the Nasdaq grew 1.86%.[1]
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Markets shot up on Friday after a better-than-expected jobs report showed slow and steady improvement in the labor market. Here are some high level takeaways: The economy gained 217,000 new jobs in May, many in business services and healthcare, indicating that the quality of available jobs may also be improving. Though headline unemployment is unchanged at 6.3%, digging deeper, we can see that the number of people who can't find full-time jobs has fallen, as has the number who are forced to work part-time for lack of better options.[2] This is great news for the labor market.
We also want to point out an important milestone reached last month: The economy has regained all of the jobs lost in the recession. The chart below shows that total nonfarm employment in the U.S. reached 138.5 million in May, up 8.8 million since the bottom of the recession in 2010.[3]
While this is a noteworthy event, when we consider population growth and labor force growth, employment is still below healthy levels and the labor market still has a ways to go.
The European Central Bank voted to adopt aggressive measures to prop up Europe's lagging economy. Though the ECB hasn't quite reached Federal Reserve-style quantitative easing measures, it cut interest rates below zero, charging banks for holding money overnight. Economists hope the move will force banks to lend money out rather than pay to keep it on deposit, increasing the availability of credit to businesses and staving off deflation.[4] Reactions to the move were mixed, with some analysts applauding the move, while others worried about the possible effects on savers. Regardless of the outcome, it will likely take several quarters to see any effects of the new lower interest rates.
The week ahead is thin on economic data, but investors will be looking at Friday's consumer sentiment report to see if Americans have regained their optimism after a weak showing in mid-May. Since consumer spending accounts for about two-thirds of economic growth, consumer attitudes play an important part in economic forecasts and short-term market movements. Retail sales will also be in focus on Thursday.
ECONOMIC CALENDAR:
Wednesday: EIA Petroleum Status Report, Treasury Budget
Thursday: Jobless Claims, Retail Sales, Import and Export Prices, Business Inventories
Friday: PPI-FD, Consumer Sentiment
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Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized. Sources: Yahoo! Finance and Treasury.gov. International performance is represented by the MSCI EAFE Index. Corporate bond performance is represented by the DJCBP. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.
HEADLINES:
Student loan debt behind housing stall? A former Federal Housing Administration head blames crushing student debt loads for delayed household formation and lackluster home sales. Higher housing prices in desirable urban areas may also make it challenging for first-time homebuyers to purchases homes.[5]
Consumer credit use rises. Americans ramped up their use of credit cards in April, pushing consumer credit growth to its fastest pace in nearly three years. Credit card use is up to its highest annual rate since November 2001. Higher use of credit is a potentially positive sign for consumer spending.[6]
Factory orders rise. Orders to American factories rose in April for the third straight month, adding to the growing pile of evidence that suggests U.S. manufacturing is picking up speed after the slow winter. Manufacturing is a significant component of the economy and strong gains should add to GDP growth this quarter.[7]
Motor vehicle sales rise. Auto sales surged last month, rising 11%, confirming that cold winter weather was the main factor in weak demand early this year. Despite issues with recalls on some brands, several automakers logged double-digit monthly sales growth.[8]
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"Life is 10% what happens to me and 90% of how I react to it."
-Charles Swindoll
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If you don't eat shellfish, substitute swordfish, rockfish, or other sustainably harvested seafood.
Ingredients:
Serves 4
16 jumbo deveined raw shrimp (peel on to prevent drying out)
16 bay scallops (about 5 ounces)
12 ounces boneless, skinless salmon, cut into 1-inch pieces
1 lemon, cut into 4 wedges
1 tablespoon olive oil or grape seed oil
flaked salt and black pepper
Directions:
- Prepare your skewers. If possible, use flat metal skewers to make it easier to turn the kebabs. If you use wooden skewers, soak them in water for at least 15 minutes to prevent burning.
- Light your charcoal grill and prepare a two-zone fire. If using a gas grill, set burners to medium.
- Thread the shrimp, scallops, salmon, and lemon wedges tightly onto the skewers, dividing the ingredients evenly between four or eight skewers.
- Drizzle or brush each skewer with oil and season with salt and pepper.
- Place skewers on the grill. If using a charcoal grill, place the skewers near the mound of coals, but not directly on top to prevent burning. Grill 3-5 minutes per side until the fish is opaque throughout.
- Plate and squeeze the grilled lemon over each kebab.
Recipes adapted from Charlyne Mattox | RealSimple.com
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Protect Your Records From Disaster
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Natural disasters can strike at any time and it's important to take steps to protect your tax and financial records. Here are some tips from the IRS:
- Keep electronic backups. Many people get emailed financial statements, which is a good way to ensure you always have access to these important documents. Ask your tax advisor for help scanning tax records, insurance policies, estate papers, and any other paper documents. Be sure to back up any CDs, DVDs, or external hard drives somewhere outside your house.
- Document your valuables. Take photos or a video of the contents of your home, office, or vacation house. This will help document any losses for insurance claims or for deductions on your tax return.
- Know where to get copies of tax returns and transcripts. Ask your tax advisor for help filing a request for lost tax returns or a free transcript.
For more information about disaster assistance, speak to your advisor or call the IRS disaster hotline at 866-562-5227.
Tip courtesy of IRS.gov[9]
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There are few things on the golf course more frustrating than missing an easy putt. Take the anxiety out of short, straight putts (that can be played inside the hole) by visualizing a second hole several feet in front of the real one. Align yourself with the imaginary hole and focus on making a short, aggressive putt to the back of the first cup. The ball should hold the line and pour right into the real hole.
Tip courtesy of Matt Swanson | Golf Tips Mag[10]
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Gum disease and tooth decay can lead to serious health problems. Protect your oral health with these simple daily activities:
- Wait before brushing. Food leaves acid in your mouth, which takes saliva 30 minutes to an hour to neutralize. Brushing while the acid is still active can brush your tooth enamel away.
- Work up a sweat. Periodontal experts think exercise can reduce the risk of some gum diseases.
- Ask the dentist to check your gums. At your next dental visit, make sure the dentist checks your gums carefully for pockets. Gum pockets deeper than 3mm may indicate gum disease.
- Drink plenty of water. Microbes in your mouth need a moist environment to remove food particles. If possible, drink tap water to get the benefit of fluoride, which is missing from most bottled water.
Tip courtesy of AARP[11]
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Overfishing of many of the world's most popular fish and shellfish has led to the degradation of many wild seafood populations and habitats. Help the environment by eating sustainably harvested or raised seafood. The Monterey Bay Aquarium and the Blue Ocean Institute both offer online guides and smartphone apps that make it easier to make greener buying decisions.
Tip courtesy of The Nature Conservancy[12]
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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Diversification does not guarantee profit nor is it guaranteed to protect assets.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.
The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.
The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.
The Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally weighted by maturity cell, industry sector, and the overall index.
The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and weighted to produce the index.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
Google Finance is the source for any reference to the performance of an index between two specific periods.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
You cannot invest directly in an index.
Consult your financial professional before making any investment decision.
Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
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[1] http://goo.gl/Mpmi9H
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