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07/06/2017
Market Update

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An upward revision to first-quarter U.S. gross domestic product (GDP) produced a final reading of 1.4% annualized growth. Residential and business investment contributed most, while consumer spending crept along at the slowest pace in four years.
    This Week
  • An upward revision to first-quarter U.S. gross domestic product (GDP) produced a final reading of 1.4% annualized growth. Residential and business investment contributed most, while consumer spending crept along at the slowest pace in four years.
  • The trade deficit shrank slightly in May to $65.9 million. Exports climbed by 0.4%, showing strength in vehicles and consumer goods, while imports fell by 0.4% on fewer imports of capital goods and food. A smaller trade deficit increases GDP.
  • Durable goods orders fell by a disappointing 1.1% in May, while the previous month’s reading was revised downward to -0.9% from -0.7%. Commercial aircraft orders plummeted during the month, offsetting growth in machinery and vehicle orders. Total shipments continued to struggle.
  • The S&P CoreLogic Case-Shiller Home Price Index advanced in April, climbing by 0.3% for the month and by 5.7% year over year, reflecting a strong pace (but slower than the previous month). High demand, fueled by a strong labor market, helped drive the reading higher for the eleventh consecutive month.
  • Initial jobless claims rose by 2,000 to 244,000 in the week ending June 24. The four-week moving average (considered a more reliable gauge of unemployment) moderated by 2,750 to 242,250. Continuing claims climbed by 6,000, while the four-week moving average of continuing claims for the week ending June 17 was up 7,000 to 1.939 million. Despite these increases, jobless claims remained historically low due to strong demand for labor.
  • Consumer confidence beat expectations in June, according to the Conference Board; the outlook for employment and economic expansion remained positive, as did confidence about income growth in the near future. The University of Michigan’s consumer sentiment survey also picked up momentum in June; although this month’s reading paled in comparison to May’s.
  • Mortgage-purchase applications dropped by 4% in the week ending June 23, as affordability continued to be an issue. Refinancing also fell by 9%.
  • Consumer-spending growth slumped in May, inching up 0.1%, with the largest outlay directed to services. Income climbed by 0.4% as a result of personal income transfers and proprietor income—not due to rising wages & salaries, which only crept up by 0.1%.
  • The euro surged to its highest level in more than a year, and global bond yields also climbed after hawkish comments from European Central Bank president Mario Draghi hinted at a possible scaling back of eurozone stimulus.
  • The U.K.’s final GDP for the first quarter remained unchanged at 0.2% and at 2% for the year over year. Although the final numbers showed no change, household consumption rose by 0.4% and government spending also grew by 0.7%. The savings ratio fell by 1.6% to a new record low; this could potentially decrease household spending down the road.
  • Japan’s consumer price index (CPI) grew by 0.4% year over year in May, although headline CPI remains well below the Bank of Japan’s 2% inflation target. 

 

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