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Clarksville, TN – The economic data reports remained mixed. Real GDP fell at a 0.7% annual rate in the second estimate for 1Q15 (vs. +0.2% in the advance estimate). The revision largely reflected slower inventory growth and a wider trade deficit. Consumer spending rose at a 1.8% pace (vs. +1.9%), while business fixed investment fell 2.8% (vs. -3.8%).
There is currently a debate about whether the seasonal pattern in a number of GDP components may have changed post-recession. Unfortunately, we really don’t have enough data to say for sure.One way around this is to look at year-over-year changes. GDP rose 2.7% y/y, with Domestic Final Sales at 2.9%. Corporate profits fell in the preliminary estimate, no surprise.
Durable goods orders fell 0.5% in April, reflecting only a partial retreat in aircraft orders (which had surged in March). More importantly, core capital goods orders rose 1.0%, following a 1.5% gain in March (they plunged 5.1% in February).
The Chicago Purchasing Managers’ Index unexpectedly fell below the breakeven level in May, with new orders, backlogs, production and employment all contracting.
Except for the Chicago PMI, financial market participants largely ignored the economic data, seemingly anxious about developments in the rest of the world.
Next week, we’ll receive some fresh economic data (ISM surveys, motor vehicle sales, the Fed Beige Book), but the focus is likely to be on Friday’s job market figures. The end of the school year often presents some difficulties for the seasonal adjustment (we can expect to add about a million jobs before adjustment).
The unemployment rate should hold steady. The employment/population ratio is trending gradually higher, but still suggests an ample amount of slack in the job market.
Consumer Money Rates
Treasury Yield Curve – 05/29/2015
S&P Sector Performance (YTD) – 05/29/2015
US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the US government.
Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments.
Tax Equiv Muni yields (TEY) assume a 35% tax rate on triple-A rated, tax-exempt insured revenue bonds.
The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Data source: Bloomberg, as of close of business May 21st, 2015.
Frank White is a native of east Tennessee and reveres the hills and nature of the Cumberland Plateau and east Tennessee. He enjoys backpacking, canoeing and flyfishing. He and his wife, Natalie, have been Clarksville residents since 1979. Frank is the owner of MediaWorks, a design and printing company in Clarksville, TN.
He earned a BS in mass communications and political science from Middle Tennessee State University and a master of arts in journalism from the Indiana University School of Journalism at Bloomington. He is a distinguished military graduate from ROTC at Indiana University and is retired from the U.S. Army Reserve having also served in the Tennessee Army National Guard. He served with the U.S. Army VII Corps in Operation Desert Storm.
Frank is a passionate follower of Christ and seeks to mentor others in exploring the endless depths of grace.
Web Site: http://www.mediaworksdesign.com/
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