December 23, 2019
The U.S. economy continued to generate growth in the final reading on Gross Domestic Product (GDP) for 2019. Final Q3 GDP remained unchanged at a solid 2.1%. Within the numbers, it showed that consumer spending, which accounts for two-thirds of U.S. economic activity, was revised higher to 3.2% from 2.9%. The consumer continues to be a key factor driving the economic expansion here in the U.S.GDP measures the market value of all the final goods and services produced in a specific time period, often annually.
Consumer Sentiment remained at very favorable levels in the second of two reading in December at 99.3. Inflation expectations declined in the December survey, with both the year-ahead and five-year expected inflation rates falling and backs up the federal reserves assertion that it will remain low for the foreseeable future. In addition, the impeachment hearing had a barely noticeable impact on economic expectations, as it was mentioned by just 2% of all consumers in the December survey.
U.S. stocks are at fresh record highs on this last full week of trading in 2019. The closely watched S&P 500 is up nearly 30% this year due to an expanding economy, low unemployment, strong consumer spending and confidence along with tame inflation and low-interest rates. The Goldilocks economy continues with chances of a recession extremely low or zero for the foreseeable future.
December 10, 2019
The good news continues to stream in from the small business sector of the economy. The NFIB (National Federation of Independent Business) Small Business Optimism Index saw its largest month-over-month gain since May 2018, up 2.3 points to 104.7 in November. The NFIB said that overall, the Main Street economic machine continued to push the economy forward. “Owners are aggressively moving forward with their business plans, proving that when they’re given relief from the government, they put their money where their mouth is, and they invest, hire, and increase wages,” said NFIB Chief Economist William Dunkelberg.
Mortgage credit availability increased across all loan types in November, reports the Mortgage Bankers Association. The mortgage credit availability index rose by 2.1% to 188.9 last month. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Expanding credit availability will continue to support active levels in mortgage lending, even as refinance activity starts to level off.”
The December 15 tariff deadline on Chinese exports into the U.S. could be delayed as the two sides continue to negotiate. The White House continues to stress that Beijing commit to large purchases of U.S. farm products in order for the tariffs to be delayed. The headlines are supporting the U.S. stock markets though the gains are modest at best as the market looks ahead to the Federal reserve’s release of its monetary policy statement on Wednesday afternoon.
December 02, 2019
Freddie Mac recently reported its forecast on the housing market revealing that a strong labor should continue to buoy the sector into 2020. Freddie Mac is forecasting that mortgage rates will remain low while originations will be robust. The 30-year fixed-rate mortgage is expected at 3.8% in Q4 2019 with 2020 averaging 3.8%. Total originations are expected at $2.101 trillion this year and $2.132 trillion in 2020. The GSE went on to say that with low-interest rates, modest inflation, and a solid labor market, the U.S. housing market continues to show strength. Freddie Mac’s forecast is for the U.S. housing market to maintain momentum over the next two years. Manufacturing activity across the U.S. contracted for the fourth straight month in November due in part to the trade issues between the US and China. The ISM Manufacturing Index fell to 48.1 last month from 48.3 in October. The new orders index slipped, while the employment component also declined. A reading above 50 indicates that the manufacturing economy is generally expanding; below 50 indicates that it is generally contracting. The major stock indexes here in the US have had a banner year due in part to a strong labor market along with solid consumer spending. The Dow Jones Industrial Average is up 20% year-to-date, the S&P is up 25% while the tech-heavy NASDAQ is higher by 30%. With such lofty gains this year, could stock prices move even higher still in December? That depends upon if whether or not a “Phase One” trade deal between the US and China is hammered out by the December 15 deadline. Will there be a Santa Claus rally at year’s end … it remains to be seen. A Santa Claus rally is a calendar effect that involves a rise in stock prices during the last 5 trading days in December and the first 2 trading days in the following January.