Monthly Economic Update January 2015
On the heels of lower oil prices, increased employment, and an acceleration in domestic growth, U.S. consumers are more satisfied with the domestic economy than at any time in the past eight years. Consumer spending in the fourth quarter grew at an annualized rate of 4.3%, the fastest pace since early 2006, and consumer confidence spiked in January to a level last seen in 2007.
In contrast to consumer enthusiasm, however, stand an ever troubled outlook for global growth and cracks in the heretofore strength in U.S. corporate earnings. Weak international economies and falling worldwide inflation rates led a multitude of central banks to ease monetary policy in January. On the home front, fourth quarter earnings have come in soft and some economic indicators suggest a less sanguine outlook. Of particular note, durable goods orders have fallen each month since October, industrial production declined in December, and purchasing manager surveys suggest a slower pace of economic expansion ahead. Moreover, dollar strength is a headwind to both U.S. economic growth and corporate earnings. On that note, net exports weighed heavily on fourth quarter GDP growth and management teams have reigned in profit expectations for 2015. Consumer positives were insufficient to overcome a more troubled overarching backdrop in January. Domestic stocks were down and a material drop in interest rates drove bond prices higher.
Januaryâ€™s Economic Releases
This commentary was written by Robert W. Lamberti, CFA, Vice President of Investments and a Principal of Summit Financial Resources, Inc. Source of performance: MorningstarÂ®. Indices are unmanaged and cannot be invested into directly. The investment and market data contained in this newsletter is not an offer to sell or purchase any security or commodity. Standard & Poorâ€™s 500 Index (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The MSCI EAFE and Emerging Markets Indexes were created by Morgan Stanley Capital International (MSCI) and designed to measure equity market performance in global developed and emerging markets, respectively. The Barclays Aggregate Bond Index is a market capitalization-weighted index comprised of government securities, mortgage-backed securities, asset-backed securities, corporate securities, and a small number of foreign bonds traded in the U.S. It is used to represent the universe of bonds in the domestic market. REITs, Real Estate Investment Trusts, are securities that invest in real estate directly, either through properties or mortgages. REITs receive special tax considerations and typically offer investors high yields, however, may have liquidity constraints. Past performance does not guarantee future results. Information throughout this Newsletter, whether stock quotes, charts, articles, or any other statement or statements regarding markets or other financial information, are obtained from sources which we, and our suppliers believe to be reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither we nor our information providers shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in the transmission thereof to the reader. To unsubscribe from this investment newsletter please reply to this email with â€œunsubscribeâ€ in the subject. Opinions expressed are subject to change without notice and are not intended as investment advice or a guarantee of future performance. Consult your financial professional before making any investment decision. Securities and Investment Advisory Services offered through Summit Equities, Inc. Member FINRA/SIPC, and Financial Planning Services offered through Summit Equities, Inc.â€™s affiliate Summit Financial Resources, Inc. 4 Campus Drive, Parsippany, NJ 07054. Tel. 973-285-3600, Fax: 973-285-3666.