US Economy is beating expectations
If there is one factor with the greatest potential to mend our economy, it is a steadily improving employment picture. How so? When you look at the U.S. economy as a whole, it is primarily supported by consumer spending. In order for consumers to spend, they must have a measure of disposable income. In order to have disposable income, Americans must have jobs.
To look at it another way: As the employment situation improves, consumer spending typically increases, thus creating additional demand for goods and services. As demand for goods and services grows, more production is needed, thus creating more jobs, and so on. At risk of oversimplifying, this combination of factors explains the cycle of a healthy economy.
So are we seeing improvement in the nation's jobs picture? Yes. One year ago, the unemployment rate was 9.7%. As of October's report, it dropped to 9%. On average 152,000 jobs have been added each month during the same time period, for a total of 1.8 million jobs. In addition, the workweek has lengthened and wages are up 1.8%. All of this shows that the employment picture is gradually improving. Interestingly, October also showed improvement in chain store sales. Overall, the 23 major U.S.-based retailers that report mont
hly results posted a composite 3.4% gain, according to Thomson Reuters data.
Does this mean we are completely out of the woods? Not necessarily. For the most part, American wallets aren't fat enough to push the economic expansion into hyperdrive. Even the 1.8% wage growth mentioned above isn't enough to keep pace with current inflation rates. We still have a long way to go to reach our full potential, but things are moving in the right direction.
ECONOMIC CALENDAR:
Monday – Consumer Credit
Tuesday – Redbook
Wednesday – Wholesale Trade, Ben Bernanke Speaks at 9:30AM Eastern
Thursday – International Trade, Jobless Claims, Import and Export Prices, Treasury Budget
Friday – Consumer Sentiment
Data as of 11/04/2011 1-Week YTD 1-Year 5-Year 10-Year
Standard & Poor's 500 -2.48 -0.35 2.63 -1.63 1.53
Dow -2.03 3.50 4.80 0.00 2.85
NASDAQ -1.86 1.25 4.22 3.05 5.39
MSCI EAFE -6.24 -9.30 -10.4 -3.07 2.72
10-year Treasury Note (Yield Only) 2.31 N/A 2.48 4.72 4.35
Notes: All index returns exclude reinvested dividends, and the 5-year and 10-year returns are annualized.
Sources: Yahoo! Finance, MSCI Barra. Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. N/A means not available.
HEADLINES:
U.S. stocks stayed under pressure with all major U.S. indexes falling about 2% for the week. Investors remained wary over whether Greece could default on its debt and what that might mean for the global financial system.
European leaders are hoping China will be a major contributor to a $1.4-trillion bailout fund, but many in the Asian nation are uncomfortable with that prospect. They don't think China should shift its foreign trove of U.S. Treasury bonds and debts of other nations to fund the financial recovery of Greece and some of its troubled Eurozone neighbors, analysts say. One reason: Europeans are still better off than Chinese.
A new national poll shows neither Wall Street nor Occupy Wall Street conjuring up strong favorable impressions among the American public. Among 1,005 adults surveyed, 35% had a favorable impression of the protest movement that began in New York City and gained support worldwide. Only 16% could say the same for Wall Street and large corporations. 29% had a favorable impression of the tea party movement and 21% for government in Washington.
QUOTE OF THE WEEK:
“Happiness depends more on how life strikes you than on what happens.” – Andy
