Economic Perspectives (Fourth Quarter 2014)

by Jim Baird on January 23, 2015

Overall, the economy looks to be in good shape as data related to manufacturing, employment, and sentiment seemingly point to continued expansion and increasing optimism – for both consumers and businesses. Despite a sub-optimal outlook for growth globally, the U.S. appears poised for continued growth into the new year.

Read the full article>>

December’s CPI Research Notes

by Jim Baird on January 19, 2015

CaptureHeadline inflation falls by most in six years on lower oil

The first estimate for December Headline CPI suggests the index declined by 0.4%, bringing the year-over-year change in prices to 0.8%, a result that was in line with expectations.

The Core CPI, which eliminates volatile food and energy prices, was unchanged in December, pulling the year-over-year change down to 1.6%.  Economists were expecting a 0.1% increase for the month.

Two recent trends have put downward pressure on prices: the collapse in oil prices and the surging U.S. dollar.

Energy prices have fallen for six consecutive months, with the pace of the drop accelerating sharply since November.  The benefit to consumers of that slide is readily apparent in the December numbers, as broad energy costs have dropped over 10% in the past year, while gasoline declined over 20% in 2014.  Lower costs for those staples provides a bit more cushion in household budgets and flexibility to increase discretionary spending.

Similarly, the strengthening of the dollar lowers the cost of imported goods for U.S. buyers.

Lower oil prices are likely to keep a lid on headline inflation readings for now, although the path forward for oil prices is anything but clear.  Supply is ample, and demand is expected to moderate in the coming year.  However, if prices remain too low for too long, producers may be forced to cut unprofitable sources of production.  Oil prices will find a floor, but will prices recover meaningfully in the near-term?  Has oil entered a “new normal” range as a result of the combination of increased global production and slower demand growth? Those are questions for which there are no clear answers at present.

Adding it all up: the economy remains on a positive track despite the recent easing in inflation pressures.  As of now, it appears that 2015 will likely be the year in which short-term rates will finally be moving higher, although the timing and magnitude remain open questions.

Market Perspectives (January 2015)

January 19, 2015

Executive Summary The last month of 2014 saw volatility creep back into domestic equities markets. The month ended relatively flat for most asset classes, with large cap stocks holding on to their significant calendar year gains, followed closely by mid caps. Uncertainty surrounding the economic performance of non-U.S. developed economies, as well as further weakness […]

Read the full article →

Jobless Claims (week of 1.3.15) Research Notes

January 8, 2015

Jobless claims edge lower to start the year Initial jobless claims fell by 4,000 to 294,000 for the week ended January 3, roughly in line with the previous week’s print of 298,000.  The four-week moving average was virtually unchanged at 290,500. Claims kicked off the year where they left off last year, hovering just below […]

Read the full article →

Market Perspectives (December 2014)

January 2, 2015

Executive Summary Domestic equities, particularly large caps, enjoyed strong gains in a month free from the high volatility experienced in October. Small caps were the outliers, ending the month virtually flat. Fixed-income returns were positive for November as demand for lower-risk assets was sustained. Yields on the benchmark 10-year Treasury fell. Overseas, equities in developed […]

Read the full article →

Jobless Claims (week of 12.27.14) Research Notes

December 31, 2014

Weekly claims rise last week; 4-week average holds steady Initial jobless claims rose to 298,000 for the week ended December 27, a sizeable increase from the previous week’s revised print of 281,000.  This week’s result left the four-week moving average virtually unchanged at 290,750. Job growth was quite strong throughout 2014, highlighted by an acceleration […]

Read the full article →

December Perspectives Podcast

December 23, 2014

A new PMFA Perspectives Podcast is now available via the link below: December Market Perspectives Podcast

Read the full article →

November’s CPI Research Notes

December 17, 2014

Collapse in oil prices weighs heavily on November CPI Disinflation ruled the day in November, as the sharp decline in energy costs pulled the headline Consumer Price Index down by 0.3% to just 1.3% on a year-over-year basis.  The decline was the largest single-month drop since December 2008, and easily exceeded the expected result of […]

Read the full article →

Consumer Sentiment Research Notes

December 15, 2014

Consumer Sentiment Soars in December The University of Michigan Consumer Sentiment Index soared in November, printing at 93.8 this morning, a sizeable increase from the previous month’s upwardly revised reading of 88.8 and easily surpassing expectations.  The index is now at its highest level since 2007.  While some of this gain is attributable to typical […]

Read the full article →

November Retail Sales Research Notes

December 11, 2014

Retail sales up strongly in November Retail sales advanced at a 0.7% clip in November, easily outpacing expectations for a 0.4% rise.  Core retail sales, which exclude motor vehicle sales, gasoline, and building materials, increased 0.6%.  Sales in October were also revised upwards to 0.5%.  The month-on-month gain was the best result since March.  After […]

Read the full article →