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Weekly Economic Update for June 3, 2013

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CONSUMERS UPBEAT IN MAY, SPEND LESS IN APRIL

Consumer spending slipped 0.2% in April, with a 4.4% drop in purchases of gas, electricity and other energy goods and services being a major influence. In better news, the Commerce Department noted a 3.4% rise in personal spending in Q1, and the two most-watched consumer confidence gauges beat consensus forecasts last week. The Conference Board’s May survey came in at 76.2, topping the 72.5 projected by analysts polled by Briefing.com. The final May consumer sentiment survey from the University of Michigan rose to 84.5; the same group of forecasters had projected it at 82.5.1,2

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Weekly Economic Update for May 28, 2013

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APRIL DATA AFFIRMS HOUSING REBOUND

Last month brought a 2.3% gain in new home sales and an 0.6% increase in existing home sales. Distressed properties (short sales and foreclosures) represented only 18% of residential resales in April, the National Association of Realtors noted; compare that with 28% of sales in April 2012. NAR also announced that the median existing home price was $192,800 in April, 11.0% higher than a year ago. The pace of new home buying has improved 29.0% in the past 12 months, according to the Census Bureau.1,2

FED MINUTES DISCLOSE THOUGHTS OF TAPERING QE3

The May 1 Federal Open Market Committee minutes were released last Wednesday, shortly after Federal Reserve chairman Ben Bernanke mentioned the need to sustain the central bank’s current stimulus effort in Congress. The minutes, however, noted that “a number” of Fed officials were open to scaling down QE3 as soon as June if economic indicators sufficiently improved. Concern and confusion about these mixed messages put more volatility into the markets and factored into a 3-day losing streak for the S&P 500.3

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Weekly Economic Update for May 13, 2013

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HOW IS THIS EARNINGS SEASON TURNING OUT?

At the closing bell on May 10, 90% of S&P 500 firms had reported quarterly results. According to Reuters, 67% of them have surpassed earnings forecasts and 24% have fallen short of projections. Should the remaining 50 components report results matching estimates, earnings will be up 5.3% on last year. Sales gains are another story: just 46% of companies reporting so far have beaten their revenue forecasts.1,2  

FED RAMPS UP ITS FINANCIAL SCRUTINY

Federal Reserve chairman Ben Bernanke said Friday that the central bank was now keeping close tabs on the “shadow banking” sector that bred the toxic assets associated with the last credit crisis. At the Chicago Fed’s banking conference, he noted that “careful monitoring for signs of emerging vulnerabilities” constituted “probably our best defense against complacency during extended periods of calm”. In widening its oversight, the Fed is also watching asset markets, consumers and businesses for signs of systemic risk in addition to banks.3

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Weekly Economic Update for May 20, 2013

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SUBDUED INFLATION IN APRIL

Consumer and producer prices retreated last month. The federal government’s Consumer Price Index fell 0.4%, a monthly descent unseen since December 2008; the Producer Price Index declined 0.7%, its biggest monthly drop in three years. Consumer prices also fell for a second straight month; the last time that happened was in late 2008. The core CPI did rise 0.1% in April; the yearly gain in the overall CPI was just 1.1%.1

THREE MORE POSITIVE SIGNS FOR THE ECONOMY

The University of Michigan’s initial May consumer sentiment survey came in at 83.7 – its highest level since July 2007, 7.3 points above the final April mark. After falling 0.2% for March, the Conference Board’s index of U.S. leading indicators rose 0.6% for April. Census Bureau data showed retail sales ticking up 0.1% in April and 3.7% in the past year.2,3

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Weekly Economic Update for May 6, 2013

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UNEMPLOYMENT EDGES DOWN TO 7.5%

April brought a rebound in hiring. Employers added 165,000 jobs, and so the unemployment rate reached a four-year low. (The Labor Department also revised March’s job gains upward to 138,000.) Payrolls have now expanded by an average of 189,000 jobs a month during the last six months.1

CONSUMER SPENDING, OUTLOOK IMPROVE

Household spending increased 0.2% in March, the Commerce Department noted – part of a broader 3.2% advance for the first quarter. The Conference Board’s April consumer confidence index soared 6.2 points to 69.1, far exceeding the 61.0 consensus forecast of economists polled by Bloomberg.2

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