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Consumer Confidence Falters: An Economic Sign of Things to Come?

admin — Wed, 01 May 2013 17:23:01 +0000

Lately we have been focusing on the positive economic momentum that has seemed to develop over the last several months. But recently, there have been signs that this momentum may have been short-lived. From declining GDP growth to continued high unemployment, there are plenty of reasons to be skeptical of this economy. In addition, consumer confidence has been slipping recently. As a recent Bloomberg article reports:

Confidence among consumers fell in April to a three-month low as Americans grew more pessimistic about the outlook for the economy.

The Thomson Reuters/University of Michigan final index of consumer sentiment declined less than forecast, to 76.4 from 78.6 a month earlier. The median projection in a Bloomberg survey was 73.5 after a preliminary April reading of 72.3.

The figures indicate consumer spending may cool after climbing in the first quarter by the most since the end of 2010 and slow the pace of economic growth. Safeway Inc. (SWY) is among companies noting that shoppers, faced with higher payroll taxes and limited job growth, remain cost-conscious even as rebounding home prices help stabilize household wealth.

“We are seeing slightly softer growth but on the other hand household wealth looks pretty good,” Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh, said before the report. “The economy is continuing to expand but we do have some drags.”

Consumer confidence is a big deal—because it directly impacts how willing consumers are to spend money. When confidence is high, consumers are willing to spend more freely. When confidence is low, worried consumers are likely to cut back on spending in preparation for “rainy days” to come. And because a significant portion of economic activity relies on consumer spending, a decline can have serious consequences. Less spending means less income for businesses, which in turn can mean more layoffs, which further reduces consumer spending. It’s a vicious cycle.

As we have noted recently, investors must remain vigilant. While there are signs of recovery, there are also threats to be mindful of—including inflation, rising taxation, and market volatility. Declining consumer confidence only serves to highlight these threats.

If you’d like to learn more, or if you’d like help building a retirement portfolio that is protected against these economic threats, please get in touch with us today!

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The information in this blog is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by CelebritySites™.

Positive Momentum Continues to Grow: Is the Economy Finally Back on Track?

admin — Tue, 19 Mar 2013 16:03:11 +0000

It has been a very difficult 6 years for the economy. The recession of 2007-2008 and the subsequent financial meltdown led to political gridlock, skyrocketing unemployment, and the devastation of countless retirement portfolios. But now, after a long, slow, and bumpy recovery, signs that the economy is finally heading back to strength continue to accumulate. The Los Angeles Times reports:

Piece by piece, evidence has begun to accumulate that after four years of lackluster performance, the U.S. economy is on track for stronger growth than many people had expected.

The latest support for that view comes from data on consumer spending, which grew at a surprisingly quick pace in February, pushed upward by robust demand for cars and building materials.

The report this week from the Commerce Department came just a few days after employment figures showed faster improvement than most economists had projected, in large part because of the strong rebound of the market for housing. A measure of first-time unemployment claims fell to a five-year low last week.

The Great Recession of 2007-08, the steepest downturn since the 1930s, has been followed by a slow and bumpy recovery. Economists have been divided on whether growth eventually would accelerate.

The more optimistic among them have forecast that the economy would begin to accelerate once consumers and companies worked through the damage left behind by the housing bubble and debt crisis that triggered the recession. That process of “de-leveraging” has now largely run its course, and the new evidence may suggest faster growth in the coming months.

“What’s changed in the economy is that the key cyclical drivers of economic growth are kicking in,” said Wells Fargo Securities economist Mark Vitner, noting the gains in the automobile and housing markets. “We are further along the recovery process than many people realize.”

What does this mean for investors? Is the economy really back on track? Can “traditional” Wall Street investments be trusted? Investors and retirees who were burned in the crash of 2007 and 2008 won’t soon forget the experience—and with good reason. Though we are certainly seeing positive signs, it is far too early to conclude that “all is well.” Unemployment remains high, and the expanding government deficit raises the threat of increased taxation along with inflation.

Not sure how to navigate these turbulent economic times? If you’d like help creating a financial game plan for your future, we can help. We’ll help you create a portfolio that is protected against economic instability, inflation, and market volatility. Get in touch with us today!

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Gold Futures Falling: More Good News for the Economy?

admin — Tue, 26 Feb 2013 18:19:45 +0000

The President gave his State of the Union address recently—and from an economic standpoint, it’s hardly newsworthy to point out that there is a lot of work still to be done. However, despite significant challenges, there continue to be signs which indicate a recovering economy.

We received another such sign this month, as gold futures dropped in price. Why is this a good thing? Because gold is an asset that typically appreciates in value when the economy is struggling—for instance, while stocks are falling or inflation is high. As Bloomberg reports, the opposite appears to be happening right now:

Gold futures slumped below $1,600 an ounce for the first time since August as signals on the U.S. economy spurred optimism, eroding demand for the precious metal as a store of value.

In February, manufacturing in the New York region unexpectedly expanded, and consumer confidence rose to a three- month high, separate reports showed today. Billionaire investors George Soros and Louis Moore Bacon cut their stakes in exchange- traded products backed by gold in the fourth quarter, government filings showed. The Standard & Poor’s 500 index of equities has gained 6.3 percent this year, while gold has dropped 4 percent.

“The economy is doing better and equities are winning, so people don’t want gold,” Michael Gayed, the chief investment strategist at New York-based Pension Partners LLC, which advises on more than $150 million in assets, said in a telephone interview. “No one wants to invest in safe-haven assets.”

Gold futures for April delivery slumped 1.6 percent to settle at $1,609.50 at 1:37 p.m. on the Comex in New York. Earlier, the price touched $1,596.70, the lowest for a most- active contract since Aug. 15. This week, the metal dropped 3.4 percent, the most since June.

Now, it’s important that we keep things in perspective and not attach too much significance to any single occurrence. Significant threats remain for our economy—high unemployment, an exploding government deficit, possible high inflation, and more. But positive signs such as a strengthening in the housing market and a return of manufacturing jobs must not be ignored either.

If you’d like to learn more, or if you’d like help creating a portfolio that is protected against external forces such as market volatility and economic instability, please get in touch with us today!

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The State of the Economy: Positive Signs, But Challenges Remain

admin — Tue, 04 Dec 2012 18:47:17 +0000

It’s certainly been a tumultuous couple of years for the economy. Between the financial crash of 2007-2008, the recession, continued volatility, a crash in real estate value, and the current government debt crisis, economists have been anything but bored recently. Of course, investors are paying close attention as well. While few people are happy about the idea of tying their financial future to politicians in Washington DC and bankers on Wall Street, the reality is that the state of the economy goes a long way towards determining sound investment strategy. Bloomberg recently published an update on the state of the real estate market, consumer confidence, and the economy as a whole. Below is a brief excerpt:

Americans signed more contracts in October to purchase previously owned homes, another sign the recovery in the housing market is being sustained.

The index of pending home resales climbed 5.2 percent, exceeding the highest estimate in a Bloomberg survey of economists, to 104.8 after a revised 0.4 percent gain in September, figures from the National Association of Realtors showed today in Washington. The median forecast in the Bloomberg survey called for a 1 percent gain.

The lowest mortgage rates on record, stable prices and waning foreclosures are helping underpin sales three years after the last recession ended. Federal Reserve policy makers have targeted the industry with purchases of mortgage-backed securities as they seek to bolster the labor market and the expansion.

“As folks start to feel a little more comfortable about their home price, they’re going to put it on the market and you’re going to start to see this trend continue” of higher sales, Anika Khan, a Charlotte, North Carolina-based senior economist at Wells Fargo & Co., said before the report. “We still see the overall residential market continuing to add to growth in the coming quarters.”

Consumer Confidence

“We’ve had very good housing affordability conditions for quite some time, but we’re seeing more impact now from steady job creation, and rising consumer confidence about home buying now that home prices have clearly turned positive,” Lawrence Yun, chief economist at the Realtors’ group, said in a statement.

As you can see, there are reasons for optimism. But there is also a long way to go before the economy regains full strength. In the meantime, it’s important to pay attention so that you’re not caught off guard—like so many have been in recent years. If you’d like to learn more, or if you’d like help navigating these turbulent economic waters, please get in touch with me today!

Retirement Planning: Does Wall Street Have Your Best Interests in Mind?

admin — Fri, 19 Oct 2012 17:45:45 +0000

For many years, the “American Dream” was relatively simple: attend college, find a job in your industry of choice, work for that company for decades, invest in the stock market, and retire once you’d earned enough to support your lifestyle. Today, however, everything has changed. For one thing, the days of an employee working for a single company are all but gone. From a financial planning perspective, this change isn’t particularly important. What IS significant for our purposes, however, is the way that Wall Street has changed over the years.

Thirty years ago, most Americans believed that if they took a disciplined approach to investing, they would be rewarded for it. IRAs and 401Ks become extremely popular tools for retirement savings, because everyone generally accepted that the stock market was a reliable investment vehicle.

But “dot com” bubble of the 1990s and the “great recession” of 2008-2009 changed the perception of Wall Street, and for good reason. Retirees collectively lost untold millions of dollars in a matter of months in 2009—many of them seeing years or even decades of disciplined investing wiped away. To make matters worse, it is now clear that the financial collapse was at least partially caused by Wall Street firms looking to put more money in their own pockets, even if that meant exposing investors to additional risk. Investors and retirees saw their hard-earned money washed away… and at the same time saw the disgraced executives in Wall Street firms leaving their jobs with multi-million dollar severance packages.

Meanwhile, scandal after scandal emerged. From rogue traders to insider trading scandals, Americans were forced to consider whether or not they could really trust Wall Street firms to keep their best interests at heart.

The bottom line is that the world of investments has changed. While there are plenty of good people that work on Wall Street, large firms have a hard time delivering the quality of service and personalized solutions that today’s investors need. At Spicer Wealth Management, we want to help. If you’d like to learn more about planning for your financial future, despite our volatile economy, get in touch with us today!

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What Does the Federal Reserve’s Latest Stimulus Mean for Your Portfolio?

admin — Fri, 28 Sep 2012 19:41:02 +0000

You’ve probably heard that the Federal Reserve just announced significant new efforts to stimulate our sluggish economy this month. Today, we’re going to take a look at the impact these actions may have on your portfolio. But first, let’s go over what happened. As ABC News reports:

The Federal Reserve announced its highly-anticipated quantitative easing, or its so-called QE3, purchasing additional agency mortgage-backed securities at a pace of $40 billion per month in another effort to stimulate the struggling economy.

The Fed wants to lower near-zero interest rates, citing an “elevated” unemployment rate and “strains in global financial markets.”

The Fed said it was “concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions.”

Scott Brown, chief economist with Raymond James, said the Fed’s open-ended securities purchases will depend critically on the jobs market. On Friday, the Labor Department announced the U.S. added a meager 96,000 jobs in August though the unemployment rate fell to 8.1 percent on account of the unemployed leaving the labor force.

“The idea is that you want to encourage more economic activity,” Brown said. “Having low interest rates, consumers are more likely to be able to borrow, take risks and to make car and home purchases.”

The Fed’s policies will help keep mortgage rates down, though monetary policy affects the economy with a lag.

Wall Street responded to the announcement with an immediate rally—but in the long term, will these policies be good for investors?

The concern that many economists have is that the Federal Reserve may be all-but guaranteeing significant inflation in the future. By continuing to pump billions of dollars into the economy, they increase the overall supply of US dollars in the marketing place. Economics 101 tells us that this will eventually devalue the dollar.

As an investor, it’s important to pay close attention to these developments. If your investments aren’t protected against inflation, you could see years of hard work and disciplined investments wiped away. If you’d like to learn more about this vital subject, please get in touch with me today! This material was written and prepared by Celebrity Branding.

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More Economic Bad News: What Does This Mean for Your Portfolio?

Over the last five years, we have heard plenty of economic bad news. Still, this report from ABC News has caused many economists to do a double-take:

The recession that ended three years ago this summer has been followed by the feeblest economic recovery since the Great Depression.

Since World War II, 10 U.S. recessions have been followed by a recovery that lasted at least three years. An Associated Press analysis shows that by just about any measure, the one that began in June 2009 is the weakest.

The ugliness goes well beyond unemployment, which at 8.3 percent is the highest this long after a recession ended.

Economic growth has never been weaker in a postwar recovery. Consumer spending has never been so slack. Only once has job growth been slower.

More than in any other post-World War II recovery, people who have jobs are hurting: Their paychecks have fallen behind inflation.

Many economists say the agonizing recovery from the Great Recession, which began in December 2007 and ended in June 2009, is the predictable consequence of a housing bust and a grave financial crisis.

Credit, the fuel that powers economies, evaporated after Lehman Brothers collapsed in September 2008. And a 30 percent drop in housing prices erased trillions in home equity and brought construction to a near-standstill.

As you can see, all of the ingredients for a bad economy remain in place. Unemployment is still much too high. Many small business and individuals, in particular, lack access to credit. And we haven’t even mentioned the threat of inflation that looms just around the corner, as the government continues to add to our federal deficit.

This much is clear: it’s going to be quite some time before the economy regains full strength. It could be years, it could even be decades. In the meantime, however, millions of Americans must continue to plan for their future. Kids are still heading off to college, and retirement continues to move closer. Financial planning has become more challenging than ever before. But there’s good news: you don’t have to “go it alone.” If you’d like to learn more about planning for a bright financial future, despite the challenges presented by our weak economy, get in touch with us today!

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The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by CelebritySites™.