*from www.bloomberg.com, Mar. 11, 2013 (To view original article click here.)
Take Away #1: Consumers and businesses are treating higher payroll taxes and federal spending cuts as just a speed bump for a U.S economy poised to accelerate later this year.
Key Facts and Figures:
- Americans are saving less and spending more for purchases such as new automobiles.
- Household net worth climbs with rising home values and stock indexes surging to record highs.
- Household wealth climbed in the fourth quarter to the highest level in five years.
- At $66.1 trillion, net worth for households and non-profit groups is approaching its pre-recession peak of $67.4 trillion reached in 2007.
- Companies are ramping up hiring, adding 246,000 to private payrolls in February.
- Companies are expanding investment and rebuilding inventories as they put profits accumulated during the recovery to work.
Take Away #2: Growth may pick up in the second half of the year as the fallout from budget cuts dissipates, paving the way for even stronger spending by businesses and consumers.
Key Facts and Figures:
- GDP will rise at a 2% annual average pace in the latter six months of 2013 after a 1.5% rate in the first two quarters says Dean Maki of Barclays.
- The economy can handle fiscal tightening without coming to a halt. We’ll see some slowing, certainly, but the economy is not as fragile as it was, says Maki.
Take Away #3: Shares fell today, weighed by signs foreign economies were off to a weak start in 2013.
Key Facts and Figures:
- The S&P 500 Index declined 0.1% to 1,549.61 at 10 a.m. in New York.
- China’s industrial output had the weakest start to a year since 2009, and lending and retail sales growth slowed.
- In France, industrial production fell more than expected in January as Europe’s second largest economy teetered on the brink of its third recession in four years.
Take Away #4: Spending cuts and tax increases showing little impact on consumer spending.
Key Facts and Figures:
- Brent Phipps, a paralegal for the Justice Dept. which congress has forced to reduce spending by $85 billion this fiscal year says the payroll tax increase hasn’t altered his spending habits.
- Americans are spending on bigger-ticket purchases as well.
- General Motors Co. (GM) and Ford Motor Co. (F) predict automobile sales, on pace for the best year since 2007 will remain resilient.
- Cars and light trucks sold at a 15.3 million annual rate in February after 15.2 million a month earlier.
- “Consumers appear to be taking higher payroll taxes in stride, at least when it comes to replacing older vehicles,” says Kurt McNeil of GM.
Take Away #5: Furniture and other retailers report higher sales.
Key Facts and Figures:
- Norris Home Furnishings exceeded its goal of 15% sales gains in January and February from a year earlier.
- Retailers Gap Inc. (GPS) and Limited Brands Inc. each reported sales at stores open at least a year rose 3% in February, exceeding analyst forecasts.
- Costco Wholesale Corp. (COST) reported a 6% jump that also topped analyst estimates.
Take Away #6: Purchases are likely to hold up in the face of higher taxes due to affluent consumers.
Key Facts and Figures:
- Affluent consumers, who make up a disproportionately large share of spending, tend to trim savings rather than consumption when faced with constraints.
- UBS economists estimate the top 1% of income earners put 51 cents of each dollar toward savings, allowing plenty of leeway to keep spending.
- Recent data show consumer spending rose in January even as incomes dropped by the most in 20 years, pushing the savings rate to a five-year low.
Take Away #7: Improving sales outlook is encouraging businesses to expand and add workers.
Key Facts and Figures:
- Lowe’s Cos. Is boosting spending on store upgrades and hiring and says the company plans to open 10 stores in 2013.
- Labor Dept. data released on March 8 showed overall hiring jumped by 236,000 last month after 119,000 in January.
- The unemployment rate fell to 7.7% a four year low.
- Latest figures bode well for consumer spending, which accounts for 70% of the economy.
- The Conference Board’s Employment Trends Index increased 1.1% in February, the biggest advance in a year.
- Profits for corporations in the S&P 500 index climbed to a record $100.75 a share in 2012, and will exceed $120 a share next year, according to Bloomberg.
- Cash is stoking investment as corporate confidence and demand improve.
- Orders for non-military capital goods excluding aircraft, a proxy for future business spending on equipment and software climbed 7.2% in January and up 9.8% since November.
*To view original article from www.bloomberg.com click here.