Financial Watch: Decline in Unemployment, Increase in Holiday Spending
Last Week’s Headlines
- The addition of 203,000 new jobs in November helped cut the unemployment rate to 7%, according to the Bureau of Labor Statistics. That’s the biggest monthly decline in more than a year, and leaves unemployment at its lowest level since November 2008. The return of furloughed federal government workers was a factor in the improved employment picture, but the labor force also grew, and the number of involuntary part-time workers and those who had given up looking for a job declined. November’s job growth also was higher than the 195,000 new jobs averaged monthly over the last year.
- There were more people than last year in stores over the Thanksgiving weekend, but heavy discounting meant that they spent less. According to the National Retail Federation, the average amount spent by each of the 141 million shoppers–$407–was down from almost $424 last year, though the NRF said it still forecasts a 3.9% increase in total holiday spending.
- The U.S. economy grew faster during the third quarter than previously thought. The Bureau of Economic Analysis said the annualized increase was 3.6%, substantially above the 2.8% initially estimated or the 2.5% growth in Q2. However, much of that growth was the result of businesses increasing inventories by 1.6%. Meanwhile, corporate after-tax profits were up 2.6% for the quarter; that’s reduced from Q2’s 3.5% increase, but 8.8% higher than in Q3 2012.
- The Institute for Supply Management’s U.S. manufacturing index showed a 0.9% acceleration in growth with a reading of 57.3% in November (anything above 50 indicates expansion). Meanwhile, the ISM’s gauge of the services sector showed growth slowing from 55.4% to 53.9% during the month.
- Sales of new single-family homes jumped more than 25% in October, which put them 21.6% ahead of last year, according to the Commerce Department.
- The Federal Reserve’s “beige book” report continued to see “modest to moderate” expansion of the U.S. economy, and some Federal Reserve governors suggested publicly that it is time to let tapering begin.
- Increased U.S. exports of oil, soybean, and collectibles such as art, gold, and diamonds more than offset a slight increase in imports and cut the U.S. trade deficit by 5.4% in October. The $40.6 billion deficit is down almost 5% from a year ago.
- Americans earned less and spent more in October. According to the Bureau of Economic Analysis, personal income fell 0.1% in October; adjusted for inflation, the decline was twice that. Meanwhile, personal consumption rose 0.3%.
Eye on the Week Ahead
Time is running out for a congressional budget conference committee, established as part of the deal to end the federal government shutdown, to come up with a way to avert more budget battles. A report is due Friday.
Key dates and data releases: retail sales (12/12); wholesale inflation, due date for congressional budget committee report (12/13).
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Article courtesy of Financial Advisor, Dempster Cherry of Sage Point Financial. To find out more click here