/ American Executive Tax and Financial Services
January Newsletter
2014
American Executive Tax and Financial ServicesJanuary Newsletter | Issue5 / 1Retail Sales
LSA Weekly
Retail sales for November came in stronger than expected, gaining +0.7% for the month versus an expected +0.6%. More specifically, the ‘core’ number, that excludes volatile results from autos and gasoline, rose +0.5% relative to the expected +0.3%, and October’s numbers were also revised higher by three-tenths and Sept.’s by a tenth.
The difference between the headline and core came from a solid month in auto sales, albeit through a flurry of holiday discounts.
In the core portion, sales were led by the ‘non-store retailers’ group (essentially meaning online sales) which rose +2.2%, as well as furniture and electronics, which both gained 1%—all of which on a seasonally-adjusted basis, which takes the year-end flurry into account. (For many retailers, the Christmas season represents almost half of all annual sales, which no doubt skews some of these readings from one month to the next—hence, the required seasonal adjustment. This happens in many industries, but is especially pronounced for apparel, electronics, and others, as you might expect.) Cyber
Monday fell in December this year, which also plays a role in the monthly figures.
Employment
LSA Weekly
Initial jobless claims for the Dec. 7 ending week rose to 368k from an upwardly-revised 300k the prior week—a bit of a disappointment compared to the 320k expected.
In all fairness, the Labor Department describes the post-Thanksgiving/pre-
Christmas period as a challenging one from a seasonal adjustment perspective, with results showing higher than normal volatility, so perhaps some slack is due. Continuing claims for the Nov. 30 week came in higher also, at 2,791k, above both consensus expectations of 2,743k and 2,751k the prior week.
Economic Update, December
LSA Weekly
Following the holiday, it was somewhat of a big week for economic reports as we head into the final pre-Christmas stretch.
(+) The second estimate of 3rd quarter GDP was revised up substantially from the original 2.8% to 3.6%, which was about a half-percent above expectations (which obviously also called for some improvement on the original advance estimate). The positive contribution originated almost entirely from growth in inventory accumulation, though, which removes some of the luster off of the large adjustment.
The estimated GDP for the 4th quarter is hovering around 1.5-3.0% or so—about the widest variance in figures seen in some time. Likely, that means it will show up somewhere in the middle. For 2014, estimates are biased higher, in the 3.0-3.5% area as expectations for lessened fiscal drag, better consumer spending (due to lower deleveraging activity) and finally improved business capex are slated to kick in. Globally, 2014 is looking to be a much better year with expected growth moving from sub-3% to the mid- to upper-3% range, brought about by positive results in Europe, U.K. and some key members of the EM complex, not to mention the U.S.
Housing
LSA Weekly
New home sales broke out of a few disappointing summer months to an October +25% month-over-month gain (444k homes, which surpassed a consensus estimate of 429k); this offset a poor September result released at the same time due to government shutdown delays.
Removing the usual monthly noise to a multi-period view, it appears data from the last three months shows increases in all four regions of the country, moving the overall picture to nearer that of summer prior to the weak patch. Inventory levels also moved a bit tighter to 4.9 months’ sales. Overall levels continue to report well below normal, to the extent that a 50% bump would need to occur for new home sales to recover to just over half of the activity seen a decade ago. We’re not building enough homes yet, but we’ll eventually need to.
Jobs
LSA Weekly
professional/business services as well as leisure/hospitality—although it’s still low on a relative level compared to past cycles. The layoff/discharge rate also rose a tick, but the total separation rate and quit rate were unchanged. The level of job openings remains high relative to the unemployment rate, which is another item likely weighing on the FOMC.
Car Sales:
LSA Weekly
Motor vehicle sales for November rose more than anticipated and reached another new post-recession high point.
Expected total sales of 15.8 mil. were bested by the release of 16.3 mil., and domestic sales came in at 12.6 mil., about half a million over forecast. Car sales continue to plug along quite nicely. The holiday season sales incentives are probably helping a bit as well.
Construction
LSA Weekly
Construction spending rose +0.8% for the month of October, surpassing the forecast of +0.4%. The government shutdown caused the Sept. number to also be released along with October’s, which offered a slight decline of -0.3% (consensus called for +0.5%), so part of this offsets, when coupled with some downward revisions for July and August. Notably, the single-family component declined for both Sept. and Oct., which hasn’t happened for two years.
However, the positive news is that state/local government construction expenditures rose over +3% in the month (best since the crisis), which coincides with other data affirming local government recovery based on better tax revenues and some belt-tightening.
Melisa’sCorner
Happy New Year!!!!
I am very excited to bring in 2014 with a bang! We have a lot in store for our clients this year. I look forward to seeing you in the office for your tax preparation, we have added staff to better serve you and your tax needs. I will be overseeing taxes this year but not processing them personally. I'm sure you will appreciate this so I can focus on the investment side of things.
As we grow, we still wish to meet all of our client's needs. We have many events planned and many opportunities for you to refer a friend and receive $100 for doing so!
I personally want to say a HUGE thank you to all my clients that have already referred a friend! My family, staff and I truly appreciate the gesture.
I am very happy to announce that my son graduated from Universal Technical Institute at the end of December. He studied hard and now is a certified mechanic. He has been a car lover since the age of 2. He is now seeking the opportunity to do what he loves, and that is work on cars. I am so proud of his accomplishment!
So look out in the near future for our events kick off, and PLEASE join us for a wonderful time!
Quote for the month.... "If opportunity doesn't knock, build a door." Milton Berle
Securities offered through Investors Capital Corporation, member FINRA/SIPC. 6 Kimball Lane, Lynnfield MA, 01940 800.949.1422. Advisory services offered through Investors Capital AdvisoryThe market commentary articles provided were generated by LSA Portfolio Analytics (‘LSA Weekly’) and do not necessarily represent the views of the namedrepresentative or named Broker dealer.
American Executive Tax and Financial ServicesJanuary Newsletter | Issue5 / 1
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