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Economic Update 05/28/13


Last month brought a 2.3% gain in new home sales and an 0.6% increase in existing home sales. Distressed properties (short sales and foreclosures) represented only 18% of residential resales in April, the National Association of Realtors noted; compare that with 28% of sales in April 2012. NAR also announced that the median existing home price was $192,800 in April, 11.0% higher than a year ago. The pace of new home buying has improved 29.0% in the past 12 months, according to the Census Bureau.


The May 1 Federal Open Market Committee minutes were released last Wednesday, shortly after Federal Reserve chairman Ben Bernanke mentioned the need to sustain the central bank’s current stimulus effort in Congress. The minutes, however, noted that “a number” of Fed officials were open to scaling down QE3 as soon as June if economic indicators sufficiently improved. Concern and confusion about these mixed messages put more volatility into the markets and factored into a 3-day losing streak for the S&P 500.


This contrasts with March’s 5.9% decrease. With transportation orders factored out, the April increase was still 1.3%. Census Bureau reports have noted improvements in hard goods orders in two of the past three months, even with the sequester.


While the small-cap benchmark fell 1.20% last week, it also made history on May 20: it attained the 1,000 level for the first time. The RUT settled Friday at 984.28. The S&P 500 (-1.07% to 1,649.61), DJIA (-0.33% to 15,303.10) and NASDAQ (-1.14% to 3,459.14) all slipped last week.

THIS WEEK: U.S. financial markets are closed Monday in observance of Memorial Day. Tuesday sees the release of the March S&P/Case-Shiller Home Price Index, the Conference Board’s May consumer confidence survey and earnings from Tiffany & Co. and Wet Seal. DSW and Chico’s announce Q1 results on Wednesday. In addition to new initial jobless claims figures, Thursday offers NAR’s report on April pending home sales, the federal government’s second estimate of Q1 GDP, and earnings from Krispy Kreme, BigLots! and Costco. Friday, the Commerce Department issues its report on April personal spending and the University of Michigan’s final May consumer sentiment survey arrives.

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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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