Business & Finance

Weekly Market Update: Why Do We Care About Vehicle Sales?

e29113f9de25bbc445ac_11_10.jpg
Credits: Wealth Financial Partners, LLC
e29113f9de25bbc445ac_11_10.jpg

Investors doubled down on the market rally, sending the Dow and S&P 500 to new highs after Friday’s October employment situation report showed that the unemployment rate dropped again.[i] For the week, the S&P 500 gained 0.69%, the Dow leapt 1.05%, and the Nasdaq added 0.05%.[ii]

The October jobs report buoyed hopes about the labor market by showing that job growth increased at a steady rate last month, adding 214,000 new jobs to the economy. The unemployment rate fell to a fresh six-year low, edging down to 5.8%. In terms of overall gains, the labor market has added over 200,000 new jobs a month for the last nine, the longest span of such gains since 1995.[iii]

However, many Americans are still feeling anxious about the economic recovery and their prospects. Exit polls from Tuesday’s elections showed that nearly 60% of voters felt that the economy was stuck in neutral or even going in reverse.[iv] Why? Some economists (including Federal Reserve Chair Janet Yellen) point to stagnant wage growth.[v]

Sign Up for E-News

Taking a look at the chart below, we see that while hiring has increased since the bottom of the recession, real compensation (adjusted for inflation) has remained fairly flat. While the economy is undoubtedly doing better, many Americans haven’t seen those gains reflected in their paychecks or career prospects.

Most of the job gains in October came from the retail and food service sectors, which are not the well-paying jobs that we want to see.[i] Much of that can be attributed to a pre-holiday staffing surge from restaurants and retailers who expect a solid holiday shopping season.

Are good jobs coming back? Yes, albeit slowly. One economist estimates that 34% of jobs gained in the third quarter of 2014 were in mid-paying industries as compared with just 21% a year ago. On the other end of the spectrum, low-paying jobs made up 39% of new jobs, as compared to 66% last year.[ii]

October’s auto sales report also came out last week and showed investors a couple of important things: Auto sales are booming, up significantly since last year; average sale price is also up, gaining nearly 3% since October 2013; even better, price gains are outstripping incentives, meaning that car makers are able to offer fewer incentives to buyers, which is great news for firm profit margins.[iii] Why do we care about vehicle sales? We can treat big-ticket sales like autos as a broad proxy for overall consumer spending; generally speaking, when Americans feel well off enough to buy a new car, they are probably spending well in other areas.

Next week’s calendar is light on economic data and earnings season is largely over. With markets at new historical highs, it’ll take some pretty good news to keep buying pressure up. With a slow week ahead, it wouldn’t be surprising for investors to want to take some profits off the table and wait for more economic indicators. Analysts will be looking for Friday’s retail sales report to contextualize the surge in retail hiring. If strong shopping trends support the job growth, it may show that retailers are on track for a solid holiday season. If not, investors may worry that retailers will be hurt by high costs.

HEADLINES:

Oil price slump could affect shale oil industry. While plummeting oil prices puts money in consumers’ wallets, it could also undermine the production of domestic shale oil, which is only economically feasible with oil prices above $80/barrel.[i]

Factory goods orders slide in September. New orders for U.S. factory goods fell for the second month in a row in September, underscoring worries about global growth. On the other hand, unfilled orders rose, indicating that October could be a better month.[ii]

Trade deficit widens in September. The difference between U.S. imports and exports increased as exports fell, highlighting concerns that slow global growth and a strong dollar could undermine U.S. trade.[iii]

Construction spending falls in September. Construction outlays fell unexpectedly as private construction fell to its lowest level since October 2013. While construction numbers can be volatile, slower building could indicate a lack of business confidence in the economy.[iv]

 

About Wealth Financial Partners, LLC

Wealth Financial Partners is an independent retirement planning and wealth management firm based out of Basking Ridge, New Jersey with expertise in financial life planning including investments, long-term care insurance, life insurance, 401(k) rollovers, retirement planning, tax planning and wealth conservation. For more information about Wealth Financial Partners, LLC, (877) 714-2362

106 Allen Road, 1st Floor, Basking Ridge, NJ 07920  walter@walterpardo.com

Securities and advisory services are offered through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC. Wealth Financial Partners and IFG are unaffiliated entities. OSJ Branch: 12671 High Bluff Dr. Ste 200 San Diego, CA 92130 licensed in: CA, FL, GA, KS, MN, NY, NJ, IL, PA, OH, SC, CT. 

Information provided is from sources believed to be reliable however we cannot guarantee or represent that it is accurate or complete. Because situations vary, any information provided on this site is not intended to indicate suitability for any particular investor. Hyperlinks are provided as a courtesy. 

The opinions expressed herein are the writer's alone, and do not reflect the opinions of TAPinto.net or anyone who works for TAPinto.net. TAPinto.net is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

Sign Up for E-News

Basking Ridge

Somerville Approves 40-Acre Transit Village with Route 206 Gateway

May 13, 2018

SOMERVILLE, NJ – Somerset Station, an expansive Transit Village featuring apartments, townhouses, retail stores and a community center alongside the NJ Transit Raritan Valley line - with an interior roadway providing access to Route 206 - was given site plan and subdivision approvals by the Planning Board following a 3 ½-hour meeting Wednesday night.

The final application is based ...

Upcoming Events

Carousel_image_d4aa1a67a2453396e08f_dog_walk_april_24_2010_group_shot_copy

Sat, May 26, 10:15 AM

Lord Stirling Stable, Basking Ridge

Lord Stirling Stable Offers Saturday Dog Walks

Health & Wellness

Fri, June 1, 9:00 AM

The Wayrick Gallery, Scherman Hoffman Wildlife Sanctuary, Bernardsville

NJ Audubon: NJ Audubon Photography Instructors’ ...

Arts & Entertainment Green

Somerset Hills YMCA Swim Team has Record-Breaking Short Course Season

May 22, 2018

BASKING RIDGE, NJ - In April, Somerset Hills YMCA (SHY) Swim Team Parent Organization celebrated the team’s 2017-2018 season with its annual Awards Banquet held at the Westin Governor Morris in Morristown. The event celebrates swimmers and the contributions of coaches and parents. This year, the team had quite a few record-breaking accomplishments to be proud of.

As a charitable ...

SURVIVING A STROKE: Quick Medical Response Gives Mom Her Life Back

Carotid artery dissection. It’s one of the most common causes of stroke in younger adults.

And while you might not associate the word “stroke” with younger patients, the condition – if not treated immediately – could lead to paralysis and even death.

Lindsey Singh can attest to the importance of immediacy. The 31-year-old mother of two from Flanders experienced ...

AtlantiCast

AtlantiCast: Episode 15

On this week’s AtlantiCast, learn some important tips for controlling and avoiding diabetes from an Atlantic Health System expert, see how Atlantic Health is advancing cutting-edge research, hear what’s being done to keep health care environmentally friendly and much more!