Search

Weekly Economics Summary

Strategas 3.10.2019


The first quarter of 2019 looks to be an air pocket for economic growth. U.S. tax refunds have been choppy, though they finally started to pick up in recent weeks. The Atlanta Fed GDPNow tracker is at 0.5% q/q A.R. for 1Q in the U.S. There has been a package of coincident U.S. economic indicators that have all weakened recently (retail sales, industrial production, mfg sales, auto sales). The latest (and biggest) recent hit was to U.S. nonfarm payroll employment, which rose just 20,000 m/m. There was likely some seasonal noise as construction jobs fell -31,000 after a Jan surge. Still, private service-providing sectors added just 57,000 jobs m/m. There’s a lot of noise here, but this is more than just a fluke. U.S. average hourly earnings continued to trend higher with wage growth up +0.4% m/m and 3.4% y/y. This makes sense with the unemployment rate falling to 3.8% in Feb (ie, a “full employment” report). Labor force participation held at 63.2%. The U6 underemployment rate has been noisy the past three months (given the govt shutdown), but declined to 7.3% in Feb. Slack is gone. Data abroad remains weak with China exports plunging in Feb and the ECB adding more stimulus last week. Norbert Ore notes that global PMI surveys are showing weakness thru Feb, especially outside the U.S. Our global PMIs monthly net score continues to decline. Of particular note now, China has slowed enough such that the local fiscal policy response is notable. Policymakers are targeting 6-6.5% real GDP growth in China, and they are likely to get it. Even if the early stimulus in China was “pushing on a string” as the Chinese consumer saved instead of spending, the stimulus (business+consumer) continues to ramp up in 2019. Bottom line: the U.S. has joined the global slowdown in 1Q. But it’s important to keep any weakness in perspective, given that U.S. consumer confidence & housing already look to be rebounding (eg, U.S. housing permits up +1.4% m/m in Jan, new home sales up +3.7% in Dec). Even modestly lower interest rates can help here. U.S. non-mfg PMI orders bouncing in Feb is also a welcome data point. The reported Feb increase in temphelp jobs is also an encouraging leading indicator. We continue to believe a soft landing is possible. We want to be careful to emphasize the leading indicators (which are ok) over the coincident indicators (which are weak).

0 views

These materials have been independently produced by Summit Financial Wealth Advisors.
Summit Financial Wealth Advisors is independent of, and has no affiliation with, Schwab Wealth Investment Advisory, Inc. (“SWIA”), Charles Schwab & Co.,Inc. (“CS&Co”), or any of their affiliates (together, “Schwab”). Schwab has not created, supplied, licensed, endorsed, or otherwise sanctioned these materials nor has Schwab independently verified any of the information in them. Institutional
Intelligent Portfolios™ is an automated investment management service for independent
advisors sponsored by SWIA and available exclusively through independent investment
advisory firms like Summit Financial Wealth Advisors. Summit Financial Wealth Advisors, not Schwab, is responsible for advising you on the Program, including recommending and selecting a portfolio appropriate for you and managing your portfolio on a discretionary basis. Your portfolio will be held in a brokerage account at CS&Co. “Institutional Intelligent Portfolios” is a trademark of Charles
Schwab & Co., Inc.

Summit Financial Wealth Advisors is an independent firm with securities offered through Summit Brokerage Services, Inc., Member FINRA, SIPC, Charles Schwab & Co., Inc., Member SIPC and TD Ameritrade, Inc., Member FINRA/SIPC. Advisory Services offered separately through Summit Financial Wealth Advisors, a Registered Investment Adviser.

Check out the backgrounds of our investment professionals on FINRA's BrokerCheck.

326 Heymann Blvd. Lafayette, LA

Office: 337-232-1141

Fax: 337.232.1137   

712 Celebrity Dr. Ruston, LA

Office: 318-255-1005

Fax: 318-255-1005

1890 Hudson Circle Suite 1. Monroe, LA

Office: 318-323-3752

Fax: 318-387-4511

6425 Youree Dr. Ste 285. Shreveport, LA

Office:318-963-8675

Fax: 318-387-4511

© Copyright 2018 Summit Financial Wealth Advisors