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Economic Update 06/23/14


The Consumer Price Index increased 0.4% in May – the biggest monthly rise in over a year, with food prices up 0.5%. Labor Department data showed the core CPI (minus energy and food prices) up 0.3% for May; that was its largest monthly advance since August 2011. All this put the annualized gain in the headline CPI at 2.1% and the yearly gain in core CPI at 2.0%. Analysts polled by Reuters thought the overall CPI would increase 0.2% last month. The turmoil in Iraq could help to drive consumer prices higher this summer.


Reduced home buying eventually means reduced groundbreaking. May’s housing numbers from the Census Bureau reflected that – housing starts slipped 6.5% last month while building permits fell 6.4%. Housing starts are still maintaining a million-unit seasonally adjusted annual pace.


$107.26 a barrel – that was where NYMEX crude for July delivery closed at Friday. Even so, prices leveled off last week as ISIS insurgents in Iraq remained far away from Basra, that country’s hub for oil exports.


At Friday’s close, the blue chips stood at 16,947.08. The Dow rose another 1.02% last week, and its 5-day gain was surpassed by the advances of the Nasdaq (+1.33% to 4,368.04) and the S&P 500 (1.37% to 1,962.87). Investors were encouraged by the Federal Reserve: the Federal Open Market Committee predictably elected to make another $10 billion cut to QE3 for July and expressed confidence that the economy was improving in its Wednesday policy statement, even as it cut its projections for 2014 growth slightly to 2.1%.

THIS WEEK: The NAR releases its May existing home sales report Monday. On Tuesday, the Conference Board’s June consumer confidence index, the Census Bureau’s May new home sales report and the April S&P/Case-Shiller home price index all arrive, along with quarterly results from Walgreens. The last federal government estimate of Q1 GDP appears Wednesday, plus the Census Bureau’s May report on durable goods orders and earnings from Bed Bath & Beyond, Lennar, General Mills and Monsanto. Thursday brings May consumer spending data from the Commerce Department, the latest initial jobless claims figures and earnings announcements from Nike, ConAgra Foods and Accenture. Friday sees the release of the University of Michigan’s final June consumer sentiment index.

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About the Independent Financial Advisor

Robert Pagliarini, PhD, CFP®, EA has helped clients across the United States manage, grow, and preserve their wealth for the past 25 years. His goal is to provide comprehensive financial, investment, and tax advice in a way that was honest and ethical. In addition, he is a CFP® Board Ambassador, one of only 50 in the country, and a real fiduciary. In his spare time, he writes personal finance books, finance articles for Forbes and develops email and video financial courses to help educate others. With decades of experience as a financial advisor, the media often calls on him for his expertise. Contact Robert today to learn more about his financial planning services.

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