Economic Update

DESPITE ANXIETIES, DOW STAYS ABOVE 14,000 The DJIA settled at 14,089.66 Friday, gaining 0.64% on the week. The S&P 500 (+0.17% to 1,518.20) and NASDAQ (+0.25% to 3,169.74) also logged five-day advances. All this happened in the face of significant instability, as Wall Street fretted over the deadlock in Italy’s national elections and the sequester…

HOME SALES RISE, HOUSING STARTS FALL January brought a 0.4% improvement in existing home sales, even as the inventory of properties for sale hit a 93-month low. The National Association of Realtors reported a 25% year-over-year decline in existing home inventory, which hasn’t been seen since December 1999. The median sales price was $173,600 last…

RETAIL SALES RISE IN JANUARY The increase was minimal – just 0.1% after the 0.5% advance in December – but still welcome in the face of the 2013 payroll tax hike and higher gas prices. Commerce Department data showed core retail sales (which exclude auto, gas and home improvement purchases) up 0.1% for January; they…

A SOLID EARNINGS SEASON By Friday, nearly 70% of the firms in the S&P 500 had announced quarterly results – and so far, so good. Thomson Reuters data shows that 66% of these companies have beaten revenue projections, and nearly 70% have surpassed earnings forecasts compared to 65% over the previous four quarters. As it…

MORE HIRING … AND YET, MORE UNEMPLOYMENT In January, the jobless rate ticked up to 7.9%. The Labor Department countered that with some good news: 127,000 more workers were hired across November and December than previously thought. Last month, 157,000 new jobs were created. EXAMINING CONSUMER BAROMETERS According to the Commerce Department, personal spending rose…

HOMEBUYING DECREASES IN DECEMBER Last month, existing home sales slumped 1.0% and new home sales tumbled 7.3%. Year-over-year numbers, however, remain hugely positive. Residential resales improved 12.8% in 2012, with December’s median single-family home price up 11.5% from a year before to $180,300. New home sales rose 19.9% last year, representing the first annual increase…

NEW YEAR, NEW LAWS AFFECTING YOU  Singles earning more than $200,000 and couples earning more than $250,000 will face a 3.8% Medicare surtax and a 0.9% increase in Medicare payroll tax. Tax rates on dividends and long-term capital gains remain at 15% for most, but have risen to 20% for the wealthiest. A scheduled 2%…

STEADY HIRING AT THE EDGE OF THE CLIFF Employers added 155,000 jobs in December. The encouraging news is that non-farm payrolls continued to expand while businesses fretted about the fiscal cliff. The discouraging news is that December’s job growth roughly approximated that seen in September, October and November – and at the current pace, it…

Taxpayers with over $400,000 in taxable income or couples with over $450,000 in taxable income will see their maximum tax rate rise to 39.6% from 35% in 2012. For income earned below these levels, the 2012 rates are permanently extended and will remain the same. The Social Security portion of payroll taxes for all employees…

CRUNCH TIME IN WASHINGTON After a bipartisan meeting failed to produce a deal to avert the fiscal cliff, President Obama had a terse message for Congress Friday evening: if the Senate couldn’t come up with a new proposal during the weekend, he would urge its leaders to arrange a simple up-or-down vote on a small-scale…