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Economic Update 01/12/15


America’s best year for hiring since 2000 wrapped up with 252,000 more people finding work in December. Labor Department data showed the jobless rate declining to 5.6% last month (the U-6 rate tracking the unemployed and underemployed decreased to 11.2%). The economy added 2.53 million non-farm payroll jobs in 2014, representing 1.9% net employment growth. October and November hiring totals were respectively revised up to 261,000 and 353,000. December did see wages slip 0.2%; private sector average hourly earnings increased just 1.7% during 2014


The latest Institute for Supply Management’s non-manufacturing purchasing manager index came in at 56.2 – still strong, but well under the November reading of 59.3. Tempering that disappointment is the fact that ISM’s services index has shown sector growth for 59 consecutive months.


The price of West Texas Intermediate crude fell 8.2% last week on the NYMEX. A barrel was valued at just $48.36 at Friday’s close. With OPEC doing nothing to reduce output, investors are left wondering when the steep losses will end. Gold did very well last week, rising 2.5% on the COMEX to settle Friday at $1,216.10.


Crude’s continuing slump, excellent December hiring, assumptions of central bank action, fears following the terrorist attack in Paris – they all contributed to pronounced volatility. Selling exceeded buying: the S&P 500 lost 0.63% in five days to settle at 2,044.81 Friday. The Dow pulled back 0.50% for the week to 17,737.37, the Nasdaq 0.49% to 4,704.07.

THIS WEEK: Here comes earnings season: Alcoa reports Q4 results Monday, with KB Home following suit Tuesday. Wednesday offers data on December retail sales and November business inventories, the latest eurozone factory output report, a new Beige Book from the Federal Reserve and earnings from Charles Schwab, Kinder Morgan, Wells Fargo and JPMorgan Chase. Thursday’s spate of earnings announcements includes releases from Bank of America, Citigroup, Intel, Lennar, Schlumberger and BlackRock. On Friday, the December Consumer Price Index and the Federal Reserve’s report on December industrial output arrive along with the latest eurozone inflation reading and the preliminary January consumer sentiment index from the University of Michigan.

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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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