Weekly Economic Updates

The gap between what CEOs and the average employee earns is widening. In 1965, the average large-company CEO earned about 20 times as much as their typical employee. Between 1978 and 2011 this gap expanded at a breathtaking pace. According… Read More

Last week’s temporary resolution that saw the debt ceiling raised and government employees return to work has not done much to clear up the uncertainty around the economy and the stock market. Many data reports were delayed during the shutdown…. Read More

Although it’s already been nearly a week since the Federal government shutdown, Congress seems no closer to reaching an agreement. In our view, it seems most likely that a comprehensive agreement will be reached in advance of the October 17… Read More

Headlines about growing US crude oil production have been in the news a lot lately. In its annual statistical review, BP reported that US oil output surged 14% in 2012. The million barrel-per-day jump in output was the largest increase… Read More

Once companies have allocated capital to maintain and grow their business, they should consider paying shareholders. They can do so via either dividends or share buybacks. When implementing our investment process, we tend to favor steadily increasing dividends over share… Read More

After the closing bell on September 20, Alcoa, Hewlett-Packard and Bank of America will be dropped from the Dow Jones Industrial Average. In what will be the biggest shake-up to the 30-stock index in nearly a decade, the three stocks… Read More

Whether or not the Fed will start tapering the pace of its asset purchases seems to be the big question hanging over the market. This week stocks moved modestly higher as the negative implications of a disappointing employment report were… Read More

In June, median annual household income rose to $52,100 from its recent inflation-adjusted trough of $50,700 in August 2011. Despite this improvement, it is still $2,400 lower – a 4.4% drop – than in June 2009, when the last recession… Read More

On Friday morning, Microsoft announced that long-time CEO Steve Ballmer would retire within the next 12 months. The shares surged following the announcement—rising more than $20 billion in total market value at the market’s open. The positive reaction indicates investors… Read More

Friday’s jobs report indicated the unemployment rate dropped from7.6% to 7.4%, beating expectations of a 7.5% rate. Surprisingly, the labor participation rate – or the proportion of the population either actively employed or looking for a job – fell during… Read More

When second-quarter GDP figures are released on July 31, the U.S. Bureau of Economic Analysis will be rewriting economic history. For the first time, research and development costs will be categorized on the government’s books as an investment. Since the… Read More

Recently, US oil prices have surged breaking out of a trading range they had been in for more than a year. At the same time, oil prices in other regions of the world have been more stable. Higher US oil… Read More

For some time, China has been viewed as a key driver of worldwide economic growth. Many US multinationals have invested considerable sums in China, looking to benefit from the region’s anticipated growth. At the same time, others have questioned the… Read More

The June employment report showed the economy added 195,000 jobs, ahead of the consensus forecast of 160,000. There were further signs of job market strength as the report showed the economy added 70,000 more jobs in April and May than… Read More

Slower Can Be Better Than Faster On Tuesday, June 25, the Commerce Department lowered its estimate of first quarter GDP growth to 1.8% annualized. This was down from the 2.4% rise it previously reported. After this news, the market reversed… Read More

The twenty-city S&P/Case-Shiller Home Price Index (which is the leading index for the U.S. residential housing market – tracking changes in the value of residential real estate) saw a 10.9% rise in home prices in the twelve months ending in… Read More

Last week Ben Bernanke, Chairman of the Federal Reserve, made an important comment about how much longer he will continue the aggressive bond buying program known as Quantitative Easing. While testifying before the Congressional Joint Economic Committee he said the… Read More

The preliminary Michigan Consumer Sentiment Index (which gives a snapshot of consumer expectations regarding the overall economy) increased to 83.7 this month. This is up from 76.4 in April, and is the highest figure since July 2007. This gain in… Read More

The S&P 500 achieved a record high last week of 1633, driven by better-than-forecast first quarter earnings. The “beat rate” – the percentage of companies that are posting numbers better than consensus – was 69% this quarter, higher than the… Read More

Gross Domestic Product (GDP)-the output of goods and services produced by labor and property in the United States-advanced at an annual rate of 2.5% from January through March. The numbers paint a story similar to previous quarters: consumer spending and… Read More

US housing starts in March rose 47% from the prior year, topping 1 million for the first time since 2008. The gains were driven by strength in apartment construction, which offset a decline in single-family units. Apartment construction rose 82%… Read More

The Federal Reserve will likely continue its easy-money policy at least through the middle of this year, according to minutes released last week from the Federal Reserve’s Open Market Committee (FOMC) meeting held in March. The stock market, which has… Read More

The labor market stalled in March. US employers added just 88,000 jobs during the month, down sharply from 268,000 in February, and well below the 163,000 average posted during the prior 12 months. This is slowest pace in nine months,… Read More

Consumer confidence plummeted unexpectedly in March. However, thanks to the “wealth effect” created by rising home and stock prices, this dip doesn’t mean the economic recovery has faltered. According to the Conference Board, consumer confidence fell to 59.7, down from… Read More

Most of the nation’s largest banks are in a much stronger capital position than they were before the financial crisis, according to results from the Federal Reserve’s third annual stress test released a week ago.  The test measures a bank’s ability to… Read More

The US labor market continues to improve. Employers added 236,000 nonfarm jobs in February, beating economists’ expectations by a long shot, with nearly every industry (except government) adding payrolls. Hourly wages expanded and outstripped inflation, rising 2.1% year-over-year compared to… Read More

After a big dip in confidence last November, small business owners are increasingly optimistic about the US economic outlook, and many plan to accelerate hiring and spending during the next twelve months. Over one-third of some 800+ small business CEOs… Read More

The US government posted a $3 billion budget surplus in January.  Yes, you read that right.  For the first time since 2008, the government collected more revenue than it spent.  Although this tiny monthly surplus does little to reverse the… Read More

After a weak holiday season, shoppers returned to stores in January to take advantage of steep discounts. With the “fiscal cliff” averted, a rebounding housing market, and a stream of positive economic data that pushed the S&P 500 to a… Read More

Slow and steady. That’s our view of Friday’s payroll report, which showed that employers added 157,000 jobs in January, leaving the unemployment rate unchanged at 7.9%. Although this fell short of economists’ forecasts, the sharp upward revision in the number… Read More

The S&P 500 extended its gains last week following a flurry of positive fourth quarter earnings reports and early signs that Europe’s economy may be on the mend. About one-third of firms comprising the S&P 500 index have announced results… Read More

The US economy continues to expand at a moderate pace, despite headwinds created by the fiscal cliff and debt ceiling debate in Washington.  US stocks finished slightly higher for the week after positive reports on housing and labor, both of… Read More

The S&P 500 hit a five-year high last week following news that Chinese exports surged 14% in December, exceeding economists’ estimates for a 4.6% increase.  The better-than-expected year-over-year growth is a positive sign for global trade and the Chinese economy. … Read More

Last week Congress passed the American Taxpayer Relief Act of 2012, which averted the so-called “fiscal cliff” of immediate spending cuts and tax increases that threatened to send the US economy into a recession. Global markets rose sharply and investors… Read More

Retailers don’t have much to cheer about this season.  According to several early surveys, consumer spending leading up to Christmas Day was weaker than anticipated, with growth slowing to levels not seen since the 2008 recession.  Data from MasterCard Spendingpulse,… Read More

Sales of existing homes in the U.S. rose 5.9% from October to November to an annual rate of 5.04 million—the highest level since 2009—thanks to near-record-low interest rates.  The results exceeded the 3% gain anticipated by economists, according to a… Read More

Two dire predictions heading into 2012— a Greek exit from the eurozone and a collapse of the euro currency—have been avoided.  Last week, European Union (EU) leaders gave Greece about $65 billion in long-delayed bailout funds, which should ease that… Read More

US employers added more jobs than expected in November, another sign the US economy is on the mend, though not yet healed.  The jobs report released Friday suggests that ongoing worries about the “fiscal cliff” and weak European economy haven’t… Read More