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Weekly Economic Update
December 26, 2017
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The Markets (as of market close December 22, 2017)
Last week saw moderate trading and lukewarm gains. The small caps of the Russell 2000 outperformed the Dow and S&P 500, while the Global Dow posted the highest gains last week. Rising energy shares helped push the S&P 500, as oil prices continued to expand. The tax code overhaul didn’t seem to impact equities, at least not in the immediate aftermath of the passage of the landmark legislation. Meanwhile, long-term bond prices fell, pushing yields higher. The yield on 10-year Treasuries eclipsed its 2016 year-end closing yield heading into the last week of 2017. The price of crude oil (WTI) climbed from the prior week. The price of gold rose from prior week.
Last Week’s Economic Headlines
- According to the Bureau of Economic Analysis, the gross domestic product for the third quarter grew at an annual rate of 3.2%. The second-quarter GDP increased 3.1%. Gross domestic income – the sum of incomes earned and costs incurred in the production of GDP – increased 2.0% in the third quarter, compared with an increase of 2.3% in the second. The increase in the third-quarter GDP reflected growth in consumer spending, private inventory investment, nonresidential (commercial/business) fixed investment, exports, and government spending. Negatives in the report reflected decreases in residential fixed investment and imports. Also noteworthy, corporate profits increased $90.2 billion in the third quarter compared with an increase of $14.4 billion in the second quarter.
- Consumer income and spending increased in November, according to the latest report from the Bureau of Economic Analysis. Personal (pre-tax) income increased $54.0 billion, or 0.3%; disposable (after-tax) personal income increased $50.9 billion, or 0.4%; and personal consumption expenditures (consumer spending) increased $87.1 billion, or 0.6%. Core personal consumption expenditures (excluding the volatile food and energy components) gained only 0.1% in November. Core PCE is an inflation indicator closely followed by the Fed. Personal saving, as a percentage of disposable personal income, increased 2.9% in November.
- New residential construction (all housing types) slowed in November, according to the latest report from the Census Bureau. Building permits, an indicator of future construction, fell 1.4% compared to October, although applications for single-family homes increased 1.4%. Home completions dropped 6.1% in November from the prior month (single-family completions declined 4.6%). While permits and home completions fell, the number of new home construction starts increased by 3.3% in November, led by building starts for single-family homes, which climbed 5.3%.
- Sales of new single-family homes soared in November, increasing 17.5% above the revised October rate. November’s new home sales are 26.6% above the November 2016 estimate. The median sales price of new houses sold in November 2017 was $318,700 ($319,600 in October). The average sales price was $377,100 ($394,700 in October). The seasonally adjusted estimate of new houses for sale at the end of November was 283,000. This represents a supply of 4.6 months at the current sales rate.
- According to the National Association of Realtors®, sales of existing homes in November jumped 5.6% over October’s sales pace. Total sales, which include single-family homes, town homes, condominiums, and co-ops, are 3.8% higher than a year ago, and haven’t been this high since the 6.42 million annual sales pace of December 2006. The median existing-home price for all housing types in November was $248,000, up 5.8% from November 2016 ($234,400). November’s price increase marks the 69th straight month of year-over-year gains. Total housing inventory at the end of November dropped 7.2% to 1.67 million existing homes available for sale (9.7% lower than a year ago), and has fallen year-over-year for 30 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace, which is down from 4.0 months a year ago. The lack of inventory could slow sales down in December.
- Demand for long-lasting manufactured goods increased in November – a good sign for manufacturers. New orders for durable goods increased $3.1 billion, or 1.3%, in November over the prior month. This increase, up 3 of the last 4 months, followed a 0.4% October decrease. Shipments of manufactured durable goods in November, up 6 of the last 7 months, increased $2.4 billion, or 1.0%, to $244.5 billion. This followed a 0.5% October increase. Unfilled orders for manufactured durable goods in November, up 3 consecutive months, increased $1.1 billion, or 0.1%, to $1,137.0 billion. Inventories of manufactured durable goods in November, up 16 of the last 17 months, increased $0.9 billion, or 0.2%, to $405.2 billion.
- In the week ended December 15, the advance figure for initial claims for unemployment insurance was 245,000, an increase of 20,000 from the previous week’s level. The advance insured unemployment rate ticked up to 1.4%. The advance number of those receiving unemployment insurance benefits during the week ended December 9 was 1,932,000, an increase of 43,000 from the previous week’s level, which was revised up 3,000.
Eye on the Week Ahead
Typically, the week between Christmas and New Year’s Day does not provide much in terms of economic reports or stock market movement. However, this week does offer an opportunity to reflect on 2017 in general, and the stock market in particular, which has outpaced its 2016 performance.
We are content with the relative results this year of BWFA portfolios compared to the various weighted benchmarks we monitor, versus actual performance. Our team continues to work diligently for our BWFA clients to achieve long term results in investment portfolios with a keen eye on each client’s specific individual long range planning objectives.
Happy New Year!
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Retirement:
What You Need to Know
Tuesday, December 19, 2017
11:45 AM – 1:00 PM
Lunch to be provided
Are you prepared for retirement?
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Managing Director,
Wealth Management
Only 5 seats left!
Sign up today!
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Baltimore-Washington Financial Advisors invites you to this interactive workshop discussion on:
This discussion will 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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Is Your Child Home For Winter Break?
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Internship Open House
Thursday, December 28, 2017
11:30 AM – 1:00 PM
Lunch to be provided
INTERNS WANTED!
BWFA is looking for college students with an interest in the financial services.
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Rob Carpenter
President and CEO
Meghan Manas
Director of Client Services
Managing Director,
Wealth Management
Rachel Duncan
Tax Advisor
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Do you have a family member or friend who is in college and taking an interest in the various fields the financial services have to offer?
If so…
Baltimore-Washington Financial Advisors invites your college student to an interactive workshop on the internship opportunities available at BWFA.
Topics to include:
- Overview of Financial Services
- Tax Planning
- Financial Planning
- Customer Service
- Investment Portfolio Management
- Business Services
- Marketing
Please come prepared with copies of your resume! We will be scheduling interviews after the presentation.
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Social Security
Tuesday, January 16, 2018
11:45 AM – 1:00 PM
Lunch to be provided
Are you confused by
Social Security benefits?
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Managing Director,
Wealth Management
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Baltimore-Washington Financial Advisors invites you to this interactive workshop discussion.
Topics to include:
- How work, age and marital status affect your benefits
- Synchronizing your spousal benfits
- Minimizing taxes on your benefits
- Integrating Social Security with other retirement income
Please join us as we discuss these issues and more.
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Wellness: Self-Care Strategies for the Aging Brain
Thursday, January 18, 2018
11:45 AM – 1:00 PM
Lunch to be provided
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Managing Director,
Wealth Management
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Baltimore-Washington Financial Advisors invites you to a wellness Seminar Series with Dr. Emily Telfair, N.D.
Topics to include:
- Exploring the relationshipbetween Food and Mood
- Learning about nutrients that boost cognitive function
- Preventing dementia with healthy blood sugar managment
- Calming stress and improving memory through mindfulness meditation
Please join us as we discuss these issues and more.
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Making the Most of Medicare
Tuesday, January 23, 2018
11:45 AM – 1:00 PM
Lunch to be provided
90% of Medicare Enrollees over-pay. Will you?
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Managing Director,
Wealth Management
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Baltimore-Washington Financial Advisors invites you to join us for an informative discussion on the relevant details of Medicare.
Topics to include:
- How to enroll?
- What are the costs?
- How to choose the right plan
- Where to find additional resources
- How to “shop smart” for medicare
Please join us as we discuss these topics and more.
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State of Residence in Retirement
Thursday, January 25, 2018
11:45 AM – 1:00 PM
Lunch to be provided
Which state is best for you?
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Managing Director,
Wealth Management
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Baltimore-Washington Financial Advisors invites you to join us for an informative discussion on where you will live in retirement.
Topics to include:
- 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
Please join us as we discuss these topics and more.
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Retirement:
What You Need to Know Before You Retire
Tuesday, January 30, 2018
11:45 AM – 1:00 PM
Lunch to be provided
Are You Prepared for Retirement?
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Managing Director,
Wealth Management
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Baltimore-Washington Financial Advisors invites you to attend a symposium on implementing and adopting strategies for a succesful 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
Please join us as we discuss these topics and more.
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Tax Planning:
Strategies to Help You Plan Early for Tax Season
Thursday, February 8, 2018
11:45 AM – 1:00 PM
Lunch to be provided
The end of the year is
quickly approaching!
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Presented by:
Lex Ruygrok, CPA
Tax Consultant
Managing Director,
Wealth Management
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Baltimore-Washington Financial Advisors invites you to a discussion on lowering your tax bill!
It is almost time for taxes! Learn tips and strategies on how to save money when filing your taxes.
Topics to include:
- Three tax strategies that will save you money
- Specific tax code provisions that you need to know
- How to lower your tax bill
- How to avoid costly penalties
Please join us as we discuss these topics and more.
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