Mount-Rushmore-WallpaperAnother week, another round of record highs. Despite concerns about how France’s upcoming presidential election could affect the European Union’s stability, U.S. stocks ended the week up yet again.[i] The S&P 500 gained 1.51%, the Dow added 1.75%, and the NASDAQ increased 1.82%—growth that represents record highs for all three indexes.[ii] International equities in the MSCI EAFE also posted positive returns, with 0.78% growth for the week.[iii]

A number of data reports also came out last week, and they tell a mostly encouraging story about the economy right now.

JANUARY INCREASES

Consumer Price Index Up by 0.6%

The Consumer Price Index (CPI), which measures the average prices of specific consumer goods and services, beat expectations and experienced its largest month-over-month jump since 2013.[iv] The index is now 2.5% higher than a year ago, a sign that inflation could be picking up.[v]

Producer Price Index Up by 0.6%

Whereas the CPI evaluates price changes from a consumer’s perspective, the Producer Price Index (PPI), measures changes from the seller’s perspective.[vi] For January, the PPI also beat expectations, with energy experiencing a 4.7% increase.[vii]

Retail Sales Up by 0.4%

The monthly Retail Sales report shows growth or contraction in consumer demand for goods and can help indicate whether the economy is expanding.[viii] In addition to January’s  0.4% growth, the latest report included upward revisions for November and December 2016.[ix] Overall, Retail Sales are up 5.6% over January 2016.[x]

Small Business Optimism Index Up by 0.1 points

Each month, the National Federation of Independent Business (NFIB) releases the results of its Small Business Optimism Index, which shows results from its member surveys.[xi] This report measures the mood of small business owners—the largest employers in the U.S.—and January’s results are the highest reading since December 2004.[xii] Last month’s growth comes on the back of December’s 7.4 point jump, the survey’s largest ever increase.[xiii] In other words, small business owners are interested in hiring and expanding, good news for American workers and the economy.[xiv]

JANUARY DECREASES

Industrial Production Down by 0.3%

Last month, industrial firms, such as factories and mines, produced a lower volume of raw goods. If you dig deeper, however, the data is likely less concerning than what it may seem at first. For example, warmer-than-normal temperatures in the contiguous U.S.—a factor that does not have to do with the economy—contributed to utility output’s 5.7% decrease, the largest drop since 2006.[xv]

Housing Starts Down by 2.6%

The number of new houses beginning construction fell in January, but future construction permits increased by 4.6%—higher than any time since November 2015.[xvi] Housing Starts are also up 10.5% over January 2016.[xvii] While the most recent report shows a monthly dip, the data indicates that housing has grown over the past year and will continue to grow in the future.

As you can gather from the balance between data increases and decreases, the January reports we received last week indicate an economy that is growing. We will continue to monitor the pace of growth and stay on top of political developments as we strive to determine what changes or opportunities may be on the horizon.

ECONOMIC CALENDAR

Monday: U.S. Markets Closed for Presidents Day Holiday
Wednesday: Existing Home Sales
Friday: New Home Sales, Consumer Sentiment

Data as of 2/17/2017 1-Week Since 1/1/17 1-Year 5-Year 10-Year
Standard & Poor’s 500 1.51% 5.02% 22.02% 14.54% 6.15%
DOW 1.75% 4.36% 25.34% 11.85% 6.15%
NASDAQ 1.82% 8.46% 28.77% 19.56% 13.39%
US Corporate Bond Index 0.10% 0.65% 5.50% 3.61% 5.10%
International 0.78% 4.21% 12.54% 2.54% -2.06%
Data as of 2/17/2017 1 mo. 6 mo. 1 yr. 5 yr. 10 yr.
Treasury Yields (CMT) 0.50% 0.66% 0.82% 1.92% 2.42%

4054-1Seared Scallops
Learn to perfect searing this succulent seafood.

Serves 4

 

Ingredients:

  • 1 to 1 1/4 pounds dry sea scallops, about 16
  • 2 teaspoons unsalted butter
  • 2 teaspoons olive oil
  • Kosher salt
  • Black pepper, freshly ground

Directions:

  1. Remove the small side muscle from each scallop.
  2. Rinse scallops with cold water and pat each one dry completely.
  3. Heat a 12- to 14-inch sauté pan on high.
  4. Add butter and oil to the pan.
  5. Salt and pepper the dry scallops.
  6. Watch for the butter and oil to begin slightly smoking before adding the scallops.
  7. Place the scallops in the pan so that they do not touch one another.
  8. Sear scallops for 1 1/2 minutes on each side.
  9. Be sure the top of each scallop has a 1/4-inch golden crust and the center is translucent.
  10. Serve immediately.

Recipe adapted from Alton Brown, The Food Network[i]

Will You Have to Pay Taxes on Your Social Security Benefits?Social-security-impact-tax-for-us-citizens-abroad

Taking Social Security benefits is an essential income strategy for many retirees. If you are receiving these benefits, you may have to pay federal income tax on some of your payments. Follow these tips and reminders to help understand and uphold your tax responsibilities.

  • Receive Form SSA-1099: To start, you should receive Form SSA-1099, Social Security Benefit Statement, if you took any Social Security benefits in 2016. This form shows your benefit amounts.
  • Identify income sources: If your only income in 2016 came from Social Security, you may have a couple of filing benefits: 1) Your Social Security income may not be taxable, and 2) you also may not have to file a federal income tax return. If you have other sources of income, however, you may need to pay taxes on some of your Social Security distributions.
  • Use easy tax formula: You can quickly identify if you have to pay taxes on any Social Security income with the following equation:
    1. Identify the full amount of your income, including tax-exempt interest, that does not include Social Security.
    2. Calculate half of the total amount you received in Social Security.
    3. Add one half of your Social Security income to your other income.
    4. Compare that total to the base amount of your filing status.

If the total you calculate in Step 4 is more than your base amount, you may have to pay taxes on some of your Social Security benefits.

  • Know your base amounts: To help your calculations, you need to know the base amount for your filing status:
Amount Taxpayer Filing Status
$25,000 Single, head of household, qualifying widow or widower with a dependent child, or married filing separately and having lived apart from your spouse throughout 2016
$32,000 Married filing jointly
$0 Married filing separately and lived with spouse in 2016 for any duration of time

Tip courtesy of IRS.gov[i]

[i] https://www.irs.gov/uac/are-social-security-benefits-taxable

[i] http://www.foodnetwork.com/recipes/alton-brown/seared-scallops-recipe

[i] http://www.cnbc.com/2017/02/17/us-markets.html

[ii] http://finance.yahoo.com/quote/%5EGSPC/history?period1=1486702800&period2=1487307600&interval=1d&filter=history&frequency=1d

http://finance.yahoo.com/quote/%5EDJI/history?period1=1486702800&period2=1487307600&interval=1d&filter=history&frequency=1d

http://finance.yahoo.com/quote/%5EIXIC/history?period1=1486702800&period2=1487307600&interval=1d&filter=history&frequency=1d

http://www.cnbc.com/2017/02/17/us-markets.html

[iii] https://www.msci.com/end-of-day-data-search

[iv] http://www.ftportfolios.com/Commentary/EconomicResearch/2017/2/15/the-consumer-price-index-increased-0.6percent-in-january

https://www.bls.gov/news.release/cpi.nr0.htm

[v] http://www.ftportfolios.com/Commentary/EconomicResearch/2017/2/15/the-consumer-price-index-increased-0.6percent-in-january

[vi] http://www.investopedia.com/terms/p/ppi.asp

[vii] http://www.ftportfolios.com/Commentary/EconomicResearch/2017/2/14/the-producer-price-index-rose-0.6percent-in-january

https://www.bls.gov/news.release/ppi.nr0.htm

[viii] http://www.investopedia.com/terms/r/retail-sales.asp

[ix] https://www.census.gov/retail/marts/www/marts_current.pdf

[x] https://www.census.gov/retail/marts/www/marts_current.pdf

[xi] http://www.nfib.com/surveys/small-business-economic-trends/

[xii] https://www.zacks.com/investment-newsletter.php?arc=20170215

[xiii] https://www.zacks.com/investment-newsletter.php?arc=20170215

[xiv] http://www.nfib.com/surveys/small-business-economic-trends/

[xv] http://www.ftportfolios.com/Commentary/EconomicResearch/2017/2/15/industrial-production-declined-0.3percent-in-january

[xvi] http://www.cnbc.com/2017/02/16/us-housing-starts-jan-2017.html

[xvii] http://www.cnbc.com/2017/02/16/us-housing-starts-jan-2017.html

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