To Our Clients, Advisors and Friends:
US employers hired +288,000 workers in April 2014, the largest monthly
number reached since January 2012. The nation’s unemployment rate tumbled from
0.4% to 6.3%, the biggest monthly drop that the country has experienced
since July 1983 or 31 years ago. The fall in the rate was a function of
delayed spring hiring (due to winter storms) and to 806,000 Americans
dropping out of the employment calculation altogether. There are still 3.45
million Americans that have been out of work for at least 27 weeks (as of
4/30/14), equal to 35% of all jobless Americans (there are 9.75 million
individuals out-of-work). That percentage is double the prerecession level
of 16% from October 2006 but below the peak level of 46% from June 2010.
For workers without a job for more than 6 months between 2008 and 2012,
only 36% were employed a year later (source: Department of Labor).
April’s jobs report does suggest that the US economy is gaining strength, a
conclusion that would normally lead to rising interest rates. The Fed has
indicated that the timing of their long-anticipated rate hike will be
“data-dependent” and may not occur for another year or more. Factoring all
this information and more (including rising tensions in the Ukraine), the
bond market pushed domestic interest rates still lower last Friday
(5/02/14). The yield on the 10-year note begins today at 2.59% (source: BTN
The S&P 500 bull market that began on 3/09/09 will reach 62 months in
length as of Friday (5/09/14). The average bull market for the stock index
since 1950 has lasted 58 months. The S&P 500 is up +2.4% YTD on a total
return basis (source: BTN Research).
Notable Numbers for the Week:
1) More Renters Less Owners – 64.8% of US families are homeowners as
of 3/31/14, the lowest percentage in the country since 1995 (source: Census
2) More and More – Health care spending by the federal government
represented 2.1% of federal spending in 1962, but has risen to 27.7% of
spending by 2013 (source: Brookings Institution).
3) Booming Business – The production of crude oil in the United States
in 2014 (on an annualized basis) is at its highest level since 1985 and is
up +61% from its low point in 2008 (source: US Energy Information
4) You Are On Your Own – The personal savings rate in the USA was
13.1% in 1973. The personal savings rate in the USA was 3.8% as of 3/31/14. The
rate is defined as “savings” (i.e., after-tax income less consumption
spending) divided by after-tax income (source: Department of Commerce).