The latest Department of Labor jobs report suggests an economy with plenty of forward momentum. Employers added 312,000 net new jobs in December, the most in ten months. The main jobless rate rose 0.2% to 3.9% as more Americans entered the labor force; the U-6 rate, measuring underemployment, held at 7.6%. Last month, wages were improving at a rate of 3.2% per year, an increase of 0.1% from the prior report. November’s job gain was revised up to 176,000 from the previously reported 155,000.¹

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1 – reuters.com/article/us-usa-economy-instant-view/instant-view-us-december-payrolls-surprise-big-to-the-upside-idUSKCN1OY18F [1/4/19]

The close of the year provides an opportunity for investors to step back and consider the wider financial landscape. This week, we’re reviewing some key issues that defined 2018, as well as some factors that may influence financial markets in the coming year.

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Last week, the latest Consumer Price Index arrived, showing no move for headline inflation in November and a 0.2% core inflation increase. That precisely matched the consensus forecast of economists polled by Reuters. What held the headline CPI in check last month? You can credit a sudden drop in gas prices, which fell 4.2%. Annualized inflation declined to 2.2%. Overall producer prices only rose 0.1% last month, compared to an October ascent of 0.6%.^1,2

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1 – bloomberg.com/news/articles/2018-11-21/u-s-existing-home-sales-rise-for-first-time-in-seven-months [11/21/18]
2 – cnbc.com/2018/11/21/consumer-sentiment-final-november-reading.html [11/21/18]

Wall Street liked what it heard from Federal Reserve chairman Jerome Powell last week. While speaking Wednesday to an audience in New York, Powell stated that interest rates “remain just below the broad range of estimates of the level that would be neutral for the economy – that is, neither speeding up nor slowing down growth.” He also noted there was “no preset policy path” for raising interest rates in the near term. These dovish signals helped to send all three major U.S. stock indices 2.3-3.0% higher for the day, and their weekly performances were stellar: across five trading sessions, the Nasdaq Composite gained 5.64%; the Dow Jones Industrial Average, 5.16%; the S&P 500, 4.85%. They settled Friday as follows: Nasdaq, 7,330.54; Dow, 25,538.46; S&P, 2,760.16.^1,2

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1 – bloomberg.com/news/articles/2018-11-21/u-s-existing-home-sales-rise-for-first-time-in-seven-months [11/21/18]
2 – cnbc.com/2018/11/21/consumer-sentiment-final-november-reading.html [11/21/18]

Existing home sales improved in October for the first time in seven months. The National Association of Realtors announced a 1.4% monthly increase, while also noting that the annualized sales pace was 5.1% slower than it had been 12 months earlier. Across the year ending in October, the median sales price for an existing home rose 3.8%. There were 4.3 months of housing inventory listed last month, corresponding to the definition of a “tight” market among real estate professionals.¹

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1 – bloomberg.com/news/articles/2018-11-21/u-s-existing-home-sales-rise-for-first-time-in-seven-months [11/21/18]