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Weekly Economic Update
August 7, 2017
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The Markets (as of market close August 4, 2017)
Last week ended with a mixed bag of stock market performances. The Dow, influenced by a favorable jobs report and strong corporate quarterly earnings, surged to a new record high. The S&P 500 also ended last week in positive territory. Tech stocks did not fare as well as the large caps, pushing the Nasdaq to its second straight week of negative returns. But the worst performance befell the Russell 2000, which plummeted about 1.20% for the week, after falling nearly 0.50% the prior week. Long-term Treasury yields rose last week as prices dropped.
The price of crude oil (WTI) closed at $49.52 per barrel, down slightly from the prior week’s closing price of $49.79 per barrel. The price of gold (COMEX) closed last week at $1,264.30 by late Friday afternoon, $11.30 below the prior week’s price of $1,275.60. The national average retail regular gasoline price increased to $2.352 per gallon on July 31, 2017, $0.040 higher than the previous week’s price and $0.193 higher than a year ago.
Last Week’s Economic Headlines
- Another strong month of growth in the employment sector as there were 209,000 new jobs added in July. This follows the 231,000 new jobs added in June. Employment growth has averaged 184,000 per month thus far this year. Job gains occurred in food services and drinking places, professional and business services, and health care. The unemployment rate for the month was 4.3%, down from 4.4% in June. The average workweek was unchanged at 34.5 hours in July. Average hourly earnings rose by $0.09 to $26.36 in July. Over the year, average hourly earnings have risen by $0.65, or 2.5%.
- Not unexpectedly, growth in consumer income and spending was essentially nonexistent in June. Pre-tax personal income and after-tax personal income were unchanged in June from May. Consumer spending, as measured by personal consumption expenditures (PCE), increased 0.1% in June. Core personal consumption expenditures (excluding food and energy) also increased 0.1% for the month. For the 12 months ended in June, the PCE was up 1.4%, while the core PCE has gained 1.5%. This report confirms that, entering the summer months, inflation is relatively flat and consumers are not seeing an increase in their income. Consumer spending, which accounts for roughly two-thirds of overall economic activity, has also stagnated.
- The final report on the international trade in goods and services deficit for June showed the total trade deficit to be $43.6 billion, down $2.7 billion from May. June exports were $194.4 billion, $2.4 billion more than May exports. June imports were $238.0 billion, $0.4 billion less than May imports. Year-to-date, the goods and services deficit increased $26.7 billion, or 10.7%, from the same period in 2016.
- The purchasing managers’ index is a survey of selected companies relative to manufacturing output, new orders, inventory, employment, and prices. IHS Markit and the Institute for Supply Management (ISM) each put out a monthly index. The results of each survey are not always similar, as is the case for July. Markit’s U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) registered 53.3 in July, up from 52.0 in June, indicating an increase in production. On the other hand, the ISM purchasing managers’ index was 56.3%, down 1.5 percentage points from the June reading of 57.8%. It should be noted that a reading over 50% indicates growth, which means manufacturing expanded in July according to the ISM report, but at a slower pace than June.
- According to the Institute for Supply Management’s Non-Manufacturing ISM® Report On Business®, the non-manufacturing index slipped 3.5 percentage points in July to 53.9%. This represents continued growth in the non-manufacturing sector, but at a slower rate than in June. Survey respondents thought business activity, new orders, and employment decelerated while prices increased in July from June. The report covers industries such as accommodation and food services; utilities; wholesale and retail trade; real estate, rental, and leasing; health care and social assistance; and finance and insurance.
- In the week ended July 29, the advance figure for seasonally adjusted initial claims for unemployment insurance was 240,000, a decrease of 5,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 244,000 to 245,000. The advance seasonally adjusted insured unemployment rate remained 1.4%, unchanged from the previous week’s unrevised rate. During the week ended July 22, there were 1,968,000 receiving unemployment insurance benefits, an increase of 3,000 from the previous week’s revised level. The previous week’s level was revised up 1,000 from 1,964,000 to 1,965,000.
BWFA Eye on the Week Ahead
Trading should continue to be light as the summer rolls on. Both producer prices and consumer prices showed little upward movement in June. July’s figures are not expected to change that much as reports on the Producer Price Index and the Consumer Price Index are out this week.
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What You Need to Know About Retirement –
Before You Retire
Tuesday, August 15, 2017
11:45 AM – 1:00 PM
Lunch will be provided
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**SOLD OUT**
If you would like to be put on the wait list, please email Eve Kennedy at ekennedy@bwfa.com
Presented by:
Managing Director,
Wealth Management
Thad Ismart,
CFP®
Senior Financial Planner
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Baltimore-Washington Financial Advisors invites you to attend a symposium on implementing and adopting strategies for a successful retirement.
Topics to include:
- Avoiding the common mistakes
- Have you saved enough?
- Creating a vision – where will you live, what will you be doing, who will you live near?
- Evaluating your retirement savings
- Social Security
- Healthcare options/choices
- Creating a retirement paycheck
- Tax implications
- Asset Allocation Strategies for retirement
Come join us as we discuss these issues and more!
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In 2015 $15 Billion was stolen from 13.1 Million U.S. Consumers. What will Identity Theft cost you?
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Identity Theft: Are You Protecting Your Most Valuable Asset?
Thursday, August 17, 2017
11:45 AM – 1:00 PM
Lunch will be provided
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Only 8 Seats Available!
Presented by:
Managing Director,
Wealth Management
Ananta Hejeebu
Partner
Howard Tech Advisors
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Baltimore-Washington Financial Advisors invites you to a discussion on identity theft.
Topics to include:
- What is identity theft?
- What are the risks?
- How does identity theft happen?
- What to do if your identity has been stolen
- How to be proactive to prevent identity theft?
Come join us as we discuss these issues and more!
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Selecting an Assisted Living Facility/Community with Elville and Associates
Thursday, August 24, 2017
11:45 AM – 1:00 PM
Lunch will be provided
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Only 15 Seats Available!
Presented by:
Managing Director,
Wealth Management
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Baltimore-Washington Financial Advisors invites you to this interactive workshop on “Selecting an Assisted Living Facility/Community.”
Topics to include:
- Broad overview of assisted living options
- Challenges associated with downsizing
- Cost, amenities, financial stability and quality of care
- Reputation, residents rights, estate planning consideration
- Long-term care skilled nursing concerns
- Estate planning considerations
Come join us as we discuss these issues and more!
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Selecting your State of Residence in Retirement
Tuesday, August 29, 2017
6:00 PM – 7:30 PM
Dinner will be provided
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**SOLD OUT**
If you would like to be put on the wait list, please email Eve Kennedy at ekennedy@bwfa.com
Presented by:
Managing Director,
Wealth Management
Thad Ismart,
CFP®
Senior Financial Planner
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Baltimore Washington Financial Advisors invites you to a discussion on:
- What state is best?
- How much will it cost to stay in Maryland?
- How to decide where you will retire
- Should you purchase or rent?
- Healthcare costs by state
- Differences in state and local income taxes
- Estate planning and estate taxes by state
- Property and sales tax by state
- Cost of living by state
Come join us as we discuss these issues and more!
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What Happens When a Loved One Passes Away?
Thursday, September 7, 2017
11:45 AM – 1:00 PM
Lunch will be provided
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Presented by:
Managing Director,
Wealth Management
Attorney
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Baltimore Washington Financial Advisors invites you to a discussion on:
- What are the first things we should do?
- What happens if he/she has done no estate planning?
- What do you do with his/her will or trust?
- Should I continue to pay his/her bills?
- What should you do with his/her home?
- What is involved in settling a will or trust?
- Can a will or trust be contested?
Come join us as we discuss these issues and more!
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Social Security & Planning
Thursday, September 14, 2017
6:00 PM – 7:30 PM
Dinner will be provided
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Presented by:
Managing Director,
Wealth Management
Thad Ismart,
CFP®
Senior Financial Planner
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Baltimore Washington Financial Advisors invites you to a discussion on:
- How work, age, and marital status affect your benefits
- Synchronizing spousal benefits
- Minimizing taxes on your benefits
- Integrating social security with other retirement income
Come join us as we discuss these issues and more!
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