Happy Friday to everyone. We have some encouraging news almost all the way around.
> The stock market staged a bit of a rally yesterday, though the DOW is still down slightly for the week.
> The yield on the 10 year Treasury bond is down to 3.5% - this is a big drop from the almost 4% yield just a couple weeks ago, and mortgage rates have responded along with this yield drop. We're still off the lows of a few months ago, but this is encouraging news.
> Consumer spending increased in May, for the first time in 3 months, as average incomes also rose approximately 1.4%
> Individual savings have increased to a 15 year high, which ironically is what is holding the stock market down. Investors want and need to see us spending, in order to stimulate business. For those of you who are managing to save right now, congratulations!
> Disposable income increased an average of 1.6% due to wage increases
> The Michigan consumer sentiment index increased to 70.8% (do you remember when it was below 50% during the height of this economic downturn?)
> Some areas of the economy, including housing and manufacturing are finally seeing a slowdown in the pace of decline.
> While oil rose to above $71/barrel yesterday, based on news about the Nigerian turmoil around the oil fields and pipelines, much of that turmoil is abating through Nigerian government intervention. Oil is back under $70/barrel today.
We expect the national employment numbers next week. Most analysts expect that number to be 9.6% unemployment nationally, the highest level since the 1970s. Keep in mind that employment and unemployment are considered "lagging indicators." This means that businesses do not start hiring again until they see their numbers improving. So, we will see business improvement before we see the unemployment numbers begin to shrink. This is like a Catch 22. If all those unemployed went back to work, we would have more people spending, and businesses would be more profitable - but somehow this will work itself out; it always seems to anyway.
Enjoy your weekends. It is supposed to be warm and sunny.
This weekend, the Obama and other Healthcare reform supporters are holding limited health screenings around the state. In Oregon, almost all Farmers Markets will be hosting, at the very least, free blood pressure checks. Check out your local activity calendar to see what types of events are available in your area.
Best regards,
Shelby Bateson
503-819-6545
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