What I’m Watching This Week – 14 March 2022

The Markets (as of market close March 11, 2022)

Each of the benchmark indexes listed here closed lower for the second straight week. The war in Ukraine continued, with Ukraine’s top diplomat indicating he saw no progress in talks with Russia. Inflation continued to run hot ahead of this week’s Federal Reserve meeting. During the week, markets oscillated between panic selling and dip-buying. And the volatility wasn’t restricted to stocks — crude oil prices and bond yields also swung higher and lower. By the end of the week, the Nasdaq, the S&P 500, and the Dow fell the furthest. Crude oil prices dipped about $5.00 per barrel. Gold prices rose nearly 1.0%. The dollar inched higher, while 10-year Treasury yields added 28 basis points.

Wall Street opened last week lower. Each of the benchmark indexes listed here fell by at least 2.0%, with the Nasdaq (-3.6%) and the S&P 500 (-3.0%) dropping the most. The Russell 2000 lost 2.5%, the Dow slipped 2.4%, and the Global Dow slid 2.1%. Ten-year Treasury yields rose nearly 3 basis points to 1.75%. The dollar was mixed. Gold prices continued to climb, closing the day up 1.7% to $2,004.30 per ounce. Crude oil prices rose to $121.41 per barrel. The national average price for regular gasoline topped $4.00 a gallon for the first time in over a decade and only $0.11 lower than the record high on July 17, 2008. Rising gasoline prices at the pump are a reflection of the pressure that the Russia-Ukraine crisis has put on the global oil markets.

Other than the Russell 2000 (0.60%), the benchmark indexes listed here closed lower last Tuesday as investors weighed the impact of the U.S. ban on imports of Russian oil and energy. The S&P 500 dipped 0.7%, while the Dow fell 0.6%. The Nasdaq and the Global Dow lost 0.3%. Ten-year Treasury yields rose 12 basis points to 1.87%. The dollar slid lower, while crude oil prices advanced to $124.87 per barrel. Gold prices jumped 3.1% to $2,058.20 per ounce. Not surprisingly, energy was the only sector to gain ground, as consumer staples and health care dropped more than 2.0%. While about 8.0% of U.S. total petroleum imports come from Russia, European countries rely more heavily on Russian crude oil and natural gas for energy. The embargo on Russian energy and crude oil raises several issues, including finding alternative sources to replace the Russian supply, the impact of the embargo on global trade flows, supply chain disruptions, and inflation.

Last Wednesday, in a turn of events, stock prices surged to their biggest rally since June 2020, while European shares advanced the most since March 2020. Crude oil prices dropped nearly 11.0% to $110.32 per barrel, while 10-year Treasury yields added more than 7 basis points to close at 1.94%. The dollar and gold prices declined. The latest rally may be temporary, driven by dip buyers and bargain hunters.

Wall Street dipped lower last Thursday as investors reacted to inflation reaching a 40-year high and a lack of progress in talks between Russia and Ukraine as the war raged on. Each of the benchmark indexes listed here finished in the red, with the Nasdaq falling 1.0%. The S&P 500 lost 0.4%, followed by the Dow (-0.3%), the Russell 2000 (-0.2%), and the Global Dow (-0.2%). Ten-year Treasury prices slid, driving yields up 6 basis points to 2.01%. The dollar and gold prices rose, while crude oil prices decreased 2.3% to $106.21 per barrel. Despite the drop in crude oil prices, the energy sector advanced more than 3.0%.

Stocks continued to slide last Friday as Russia expanded its attack on Ukraine. President Joe Biden called for removal of normal trade relations with Russia, likely the precursor for new tariffs on Russian imports. A drop in tech shares pulled the Nasdaq down 2.2%. The small caps of the Russell 2000 fell 1.6%. The large caps of the S&P 500 (-1.3%) and the Dow (-0.7%) closed in the red. The Global Dow declined 0.4%. Crude oil prices rose over 3.0% to $109.40 per barrel. Ten-year Treasury yields dipped minimally, while the dollar advanced for a second consecutive day.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 3/11Weekly ChangeYTD Change
DJIA36,338.3033,614.8032,944.19-1.99%-9.34%
Nasdaq15,644.9713,313.4412,843.81-3.53%-17.90%
S&P 5004,766.184,328.874,204.31-2.88%-11.79%
Russell 20002,245.312,000.901,979.67-1.06%-11.83%
Global Dow4,137.633,908.443,872.14-0.93%-6.42%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries1.51%1.72%2.00%28 bps49 bps
US Dollar-DXY95.6498.5299.090.58%3.61%
Crude Oil-CL=F$75.44$115.37$109.40-5.17%45.02%
Gold-GC=F$1,830.30$1,971.50$1,988.000.84%8.62%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Inflationary pressures continued to advance in February. The Consumer Price Index rose 0.8% last month after increasing 0.6% in January. A 6.6% increase in gasoline prices accounted for nearly a third of the overall CPI February advance. Of note, food rose 1.0% in February, while food at home prices jumped 1.4% — both were the largest monthly increases since April 2020. The CPI has increased 7.9% since February 2021, the largest 12-month advance since the period ended January 1982. Since February 2021, the CPI less food and energy rose 6.4%, the largest 12-month change since the period ended August 1982. The energy index has risen 25.6% over the last year, and the food index increased 7.9%, the largest 12-month increase since the period ended July 1981.
  • The report on international trade in goods and services, out March 8, was for January and revealed that the trade deficit rose 9.4%, or $7.7 billion, to $89.7 billion. Exports fell 1.7% to $224.4 billion, which was more than offset by a 1.2% increase in imports ($314.1 billion). Year over year, the goods and services deficit increased $24.6 billion, or 37.7%, from January 2021. Exports increased $29.9 billion, or 15.4%. Imports increased $54.4 billion, or 21.0%.
  • According to the latest report from the United States Treasury, the government deficit for February was $216.6 billion, well above the January surplus of $118.7 billion. In February, government expenditures rose 46.0% to $506.5 billion. Government receipts fell 38.0% to $289.9 billion. Through the first five months of the fiscal year, the total deficit was $475.6 billion, significantly lower than the $1,046.7 trillion deficit over the same period in the previous fiscal year.
  • There were 11.3 million job openings in January, little changed from the previous month’s total, according to the latest information from the Bureau of Labor Statistics. Job openings declined in several industries, with the largest decreases in accommodation and food services (-288,000); transportation, warehousing, and utilities (-132,000); and federal government (-60,000). Job openings increased in other services (+136,000) and in durable goods manufacturing (+85,000). Hires and total separations were little changed at 6.5 million and 6.1 million, respectively. Within separations, the number of voluntary quits in January decreased by 151,000 to 4.3 million. The number of layoffs and discharges increased by 129,000 to 1.4 million. Over the 12 months ended January 2022, hires totaled 76.4 million and separations totaled 70.0 million, yielding a net employment gain of 6.4 million.
  • The national average retail price for regular gasoline was $4.102 per gallon on March 4, $0.494 per gallon more than the prior week’s price and $1.331 higher than a year ago. As of March 7, the East Coast price increased $0.81 to $4.97 per gallon; the Gulf Coast price rose $0.83 to $4.70 per gallon; the Midwest price increased $0.68 to $4.65 per gallon; the West Coast price increased $0.68 to $5.39 per gallon; and the Rocky Mountain price increased $0.57 to $4.54 per gallon. As of March 7, residential heating oil prices averaged $4.92 per gallon, more than $0.87 per gallon above the prior week’s price and almost $2.04 per gallon higher than last year’s price at this time. Residential propane prices averaged nearly $3.00 per gallon, up $0.11 per gallon above last week’s price and $0.58 per gallon above last year’s price. U.S. crude oil refinery inputs averaged 15.4 million barrels per day during the week ended March 4, which was 21,000 barrels per day less than the previous week’s average. Refineries operated at 89.3% of their operable capacity last week. Gasoline production increased last week, averaging 9.6 million barrels per day. On February 24, Russia’s invasion of Ukraine contributed to a significant increase in the Brent crude oil price, which rose to $134.00 per barrel as of March 8.
  • For the week ended March 5, there were 227,000 new claims for unemployment insurance, an increase of 11,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended February 26 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended February 26 was 1,494,000, an increase of 25,000 from the previous week’s level, which was revised down by 7,000. States and territories with the highest insured unemployment rates for the week ended February 19 were Alaska (2.4%), California (2.4%), Illinois (2.4%), New Jersey (2.4%), Rhode Island (2.4%), Minnesota (2.3%), Massachusetts (2.2%), New York (2.2%), Michigan (1.8%), Montana (1.8%), and Pennsylvania (1.8%). The largest increases in initial claims for the week ended February 26 were in Massachusetts (+3,201), Rhode Island (+1,040), the District of Columbia (+995), Nevada (+689), and Kansas (+587), while the largest decreases were in Michigan (-9,161), California (-5,412), Florida (-2,182), Ohio (-2,098), and Illinois (-1,777).

Eye on the Week Ahead

Some extremely important, potentially market-moving economic information is available this week, beginning with the highly anticipated meeting of the Federal Open Market Committee. A few weeks ago, much of the focus was on escalating inflation likely attributable to labor shortages and backlogs caused by rapidly expanding economic growth. The war in Ukraine has impacted not only inflation, but the global economy as well. How the FOMC responds is up to speculation, although Federal Reserve Chair Jerome Powell has indicated that he would probably favor a 25-basis-point increase to the federal funds rate.

What I’m Watching This Week – 7 March 2022

The Markets (as of market close March 4, 2022)

Wall Street was hit hard last week as traders moved from stocks to bonds and gold. Each of the benchmark indexes listed here lost value, with the Global Dow dropping more than 4.0% and the Nasdaq declining nearly 3.0%. The Russian escalation of the war in Ukraine eclipsed strong economic data at home, including a solid jobs report. The crisis in Ukraine has boosted commodities, particularly crude oil prices, which rose more than 25.0% last week. Federal Reserve Chairman Jerome Powell said he would support a 25-basis point interest rate increase in March as inflation has continued to soar.

Stocks closed mixed last Monday as investors considered more sanctions against Russia, which responded by putting its nuclear forces on high alert. The large caps of the Dow and the S&P 500 fell 0.5% and 0.2%, respectively, while the Nasdaq (0.4%) and the Russell 2000 (0.4%) added value. The Global Dow dipped 0.6%. Ten-year Treasury yields fell 15 basis points to 1.83%. The dollar inched higher, while domestic crude oil prices jumped nearly 5.0%, reaching $95.91 per barrel. Gold prices also rose, climbing to $1,910.50 per ounce. The Russian central bank raised interest rates to 20.0% as the ruble plunged following additional sanctions imposed by Western countries. The United States, the European Union, the United Kingdom, and Canada pledged to exclude certain large Russian banks from the SWIFT interbank messaging network. Talks between representatives of Russia and Ukraine ended with no deal on a potential cease-fire as the conflict intensified throughout the day.

Domestic crude oil prices vaulted past $105.00 per barrel last Tuesday, sending domestic and global stocks tumbling. Ten-year Treasury yields slid to 1.70%, marking their worst four-day drop since last December. Investors could view surging oil prices, rising inflation, and the intensifying Russia-Ukraine crisis as threats to economic growth. That, coupled with the prospect of higher interest rates, may be moving investors away from stocks. By the close of trading last Tuesday, each of the benchmark indexes listed here declined, with the Global Dow (-2.0%) and the Russell 2000 (-1.9%) falling the furthest, followed by the Dow (-1.8%), the Nasdaq (-1.6%), and the S&P 500 (-1.5%). The dollar and gold prices traded higher. Among the market sectors, financials and materials were hit the hardest, while energy rose 1.0%.

Crude oil prices, Treasury yields, and stocks climbed higher last Wednesday. The Russell 2000 jumped 2.5%, the S&P 500 rose 1.9%, the Dow gained 1.8%, and the Nasdaq added 1.6%. The Global Dow increased 1.0%. Ten-year Treasury yields advanced nearly 16 basis points to 1.87%. Domestic crude oil prices climbed nearly 8.0% to $111.51 per barrel, while the dollar and gold prices retreated. Commodity markets around the globe rose to multi-year highs last Wednesday. In addition to rising oil prices, aluminum jumped to an all-time high and wheat climbed to its highest price since 2008.

Last Thursday, stocks erased most of the gains from the previous day. A decline in tech shares dragged down the equity market, with the Nasdaq falling 1.6% and the Russell 2000 dropping 1.3%. Ten-year Treasury yields slid to 1.84%. The dollar and gold advanced, while crude oil prices retreated to $108.36 per barrel. With prices increasing at the fastest rate since 1982, Federal Reserve Chairman Jerome Powell told the Senate Banking Committee that the central bank should have cut stimulus sooner in an attempt to slow burgeoning inflation.

Despite a strong labor report (see below), stocks continued to slide last Friday. The Russell 2000 and the Global Dow dropped nearly 2.0%, the Nasdaq fell 1.7%, the S&P 500 lost 0.8%, and the Dow slipped 0.5%. Crude oil prices jumped nearly $8.00 to $115.37 per barrel. The dollar and gold prices rose, while 10-year Treasury yields fell 12 basis points to 1.72%.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 3/4Weekly ChangeYTD Change
DJIA36,338.3034,058.7533,614.80-1.30%-7.49%
Nasdaq15,644.9713,694.6213,313.44-2.78%-14.90%
S&P 5004,766.184,384.654,328.87-1.27%-9.18%
Russell 20002,245.312,040.932,000.90-1.96%-10.89%
Global Dow4,137.634,076.573,908.44-4.12%-5.54%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries1.51%1.98%1.72%-26 bps21 bps
US Dollar-DXY95.6496.5598.522.04%3.01%
Crude Oil-CL=F$75.44$92.04$115.3725.35%52.93%
Gold-GC=F$1,830.30$1,889.70$1,971.504.33%7.71%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Employment rose by 678,000 in February, according to the latest information from the Bureau of Labor Statistics. While new jobs continue to be added on a monthly basis, total employment remains 2.1 million, or 1.4%, below its pre-pandemic level in February 2020. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, health care, and construction. In February, the unemployment rate edged down 0.2 percentage point to 3.8%, and the total number of unemployed dipped by 243,000 to 6.3 million. The labor force participation rate ticked up 0.1 percentage point to 62.3%, and the employment-population ratio rose 0.2 percentage point to 59.9%. The number of those who permanently lost jobs fell marginally to 1.6 million. The number of persons not in the labor force who currently want a job declined by 349,000 to 5.4 million. In February, 13.0% of employed persons teleworked because of the coronavirus pandemic, down from 15.4% in the prior month. In February, 4.2 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic, down from 6.0 million in the previous month. Average hourly earnings in February were $31.58, up $0.01 from January’s figure. Since February 2021, average hourly earnings have increased 5.1%. The average work week rose by 0.1 hour to 34.7 hours in February.
  • The international trade in goods deficit widened in January as exports of goods dipped 1.8%, while imports increased 1.7%. The deficit for January was $107.6 billion, up $7.2 billion, or 7.1%, from the December deficit. Exports fell $2.8 billion from December, while imports increased $4.4 billion. Exports of consumer goods slipped $2.7 billion in January, accounting for most of the decrease in overall exports.
  • According to the latest PMI™ data from IHS Markit, in February the manufacturing sector registered a stronger improvement in operating conditions amid signs of easing supply-chain disruptions and a sharp expansion in new orders. Stronger new sales growth spurred manufacturers to increase staffing numbers and boost stocks of products. Although input costs increased at the slowest pace in nine months, selling prices rose at the sharpest rate since last November.
  • Business activity across the services sector rose sharply in February, according to the latest IHS Markit US Services PMI Business Activity survey. Sales grew at the fastest rate in the last seven months, aided by an increase in foreign client demand. To keep pace, businesses increased their workforce numbers at the fastest pace since May 2021. Inflationary pressures continued to increase, as a marked rise in input costs prompted firms to hike their selling prices at the fastest rate on record.
  • The national average retail price for regular gasoline was $3.608 per gallon on February 28, $0.078 per gallon more than the prior week’s price and $0.897 higher than a year ago. The East Coast price increased $0.06 to $3.56 per gallon; the Gulf Coast price rose $0.07 to $3.31 per gallon; the Midwest price increased $0.11 to $3.47 per gallon; the West Coast price increased $0.08 to $4.31 per gallon; and the Rocky Mountain price increased $0.03 to $3.37 per gallon. As of February 28, residential heating oil prices averaged $4.04 per gallon, more than $0.09 per gallon above the prior week’s price and almost $1.19 per gallon higher than last year’s price at this time. Residential propane prices averaged nearly $2.90 per gallon, up $0.05 per gallon above last week’s price and $0.39 per gallon above last year’s price.
  • For the week ended February 26, there were 215,000 new claims for unemployment insurance, a decrease of 18,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended February 19 was 1.1%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended February 19 was 1,476,000, an increase of 2,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended February 12 were California (2.6%), Alaska (2.6%), New Jersey (2.5%), Rhode Island (2.4%), Massachusetts (2.3%), Minnesota (2.3%), New York (2.2%), Illinois (2.1%), Connecticut (2.0%), Montana (1.9%), and Pennsylvania (1.9%). The largest increases in initial claims for the week ended February 19 were in Michigan (+3,500), Kansas (+724), Utah (+454), Connecticut (+349), and the District of Columbia (+239), while the largest decreases were in Missouri (-6,949), New York (-3,037), Ohio (-2,212), California (-2,182), and Tennessee (-1,959).

Eye on the Week Ahead

The economic impact of the Eastern European conflict will continue to be felt here and globally. Not only are traders paying close attention to the economic outlook resulting from the war, but they must also keep an eye on the upcoming Federal Reserve meeting, particularly in light of the latest developments in Ukraine.

Monthly Market Review – February 2022

The Markets (as of market close February 28, 2022)

Wall Street opened the month on a high note, with each of the benchmark indexes advancing. A stronger-than-expected jobs report and solid fourth-quarter corporate earnings data helped support equities. Nevertheless, concerns about the Russia-Ukraine situation began to worry investors. Natural gas and crude oil prices climbed higher. Throughout much of February, the impending crisis in Eastern Europe seemed to displace thoughts about a likely interest-rate hike from the Federal Reserve in March.

Then on Thursday, February 24, Russia launched attacks against multiple strategic targets in Ukraine. The United States, European Union, United Kingdom, Germany, Canada, Australia, and Japan responded to the Russian incursion by imposing sanctions mostly targeting Russian banks, oligarchs, and high-tech sectors, along with travel restrictions. The conflict shook global financial markets as stocks plunged. Oil and gas prices surged globally amid concerns that heating bills and food prices would skyrocket. Brent crude oil prices reached $100 per barrel. The invasion heightened the pressure on a global economy already reeling from snarled supply chains and the highest inflation in years.

As fighting continued throughout the last days of February, Western countries announced additional sanctions against Russia. Even Switzerland broke from its customary neutral stance to join the European Union in its actions. The United States, United Kingdom, Canada, and European Union blocked several major Russian banks from participating in the SWIFT payment system.

As the ruble fell, Russia’s central bank raised interest rates to 20.0%. Russian President Vladimir Putin put the country’s nuclear arms facilities on high alert. Several global companies cut ties with Russia. Canada banned Russian crude oil imports as U.S energy shares climbed higher. A meeting of delegates from Ukraine and Russia on the last day of February produced no immediate resolutions, particularly toward a cease-fire, as the conflict waged on.

Global stocks took the brunt of the turmoil. Domestically, the benchmark indexes seemed to respond more to a rise in inflationary pressures than the conflict in Eastern Europe. Nevertheless, for the second consecutive month, each of the benchmark indexes listed here fell, led by the Dow, followed by the Nasdaq, the S&P 500, and the Global Dow. The small caps of the Russell 2000 were able to post a gain.

Ten-year Treasury yields bounced up and down throughout the month, finally settling at 1.83%. Domestically, crude oil prices advanced, but not at the pace of Brent crude, which rose to $100.99 per barrel. Prices at the pump rose in February as the national average retail price for regular gasoline was $3.530 per gallon on February 21, up from the January 24 price of $3.323 per gallon. Gold prices increased notably, hitting a one-year high after rising to nearly $1,900.00 per ounce.

Stock Market Indexes

Market/Index2021 ClosePrior MonthAs of February 28Monthly ChangeYTD Change
DJIA36,338.3035,131.8633,892.60-3.53%-6.73%
Nasdaq15,644.9714,239.8813,751.40-3.43%-12.10%
S&P 5004,766.184,515.554,373.94-3.14%-8.23%
Russell 20002,245.312,028.452,048.090.97%-8.78%
Global Dow4,137.634,161.114,050.61-2.66%-2.10%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries1.51%1.78%1.83%5 bps32 bps
US Dollar-DXY95.6496.6496.700.06%1.11%
Crude Oil-CL=F$75.44$88.33$95.628.25%26.75%
Gold-GC=F$1,830.30$1,798.70$1,909.906.18%4.35%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark the performance of specific investments.

Latest Economic Reports

  • Employment: Employment rose by 467,000 in January, marginally below the December 2021 revised total of 510,000. Employment has increased by 19.1 million since April 2020 but is down by 2.9 million, or 1.9%, from its pre-pandemic level in February 2020. The unemployment rate inched up by 0.1 percentage point to 4.0%. The number of unemployed persons increased 184,000 in January to 6.5 million. Since January 2021, the unemployment rate fell 2.4 percentage points and the number of unemployed persons dropped 3.7 million. While both measures are down considerably from their highs at the end of the February-April 2020 recession, they remain above their levels prior to the coronavirus pandemic (3.5% and 5.7 million, respectively, in February 2020). Among the unemployed, the number of workers who permanently lost their jobs declined by 100,000 to 1.6 million in January. Conversely, the number of workers who voluntarily left their jobs increased 228,000 to 952,000. Also in January, the number of persons who were unable to work because their employer closed or lost business due to the pandemic jumped to 6.0 million from 3.1 million in December 2021. The labor force participation rate increased 0.3 percentage point to 62.2% in January. The employment-population ratio increased by 0.2 percentage point to 59.7%. In January, average hourly earnings increased by $0.23 to $31.63. Over the last 12 months, average hourly earnings rose by 5.7%. The average work week fell by 0.2 hour to 34.5 hours in January.
  • There were 232,000 initial claims for unemployment insurance for the week ended February 19. Over the course of 2021 and through the first two months of 2022, initial weekly claims and total claims for unemployment insurance benefits steadily decreased. As of February 12, there were 1,476,000 total claims for unemployment benefits. This is the lowest level for insured unemployment since March 14, 1970, when it was 1,456,000. A year ago, there were 4,469,000 total claims for unemployment insurance benefits.
  • FOMC/interest rates: The Federal Open Market Committee did not meet in February. However, it is expected the federal funds target rate range will be adjusted higher following the March meeting.
  • GDP/budget: Gross domestic product rose 7.0% in the fourth quarter of 2021 compared with a 2.3% advance in the third quarter. Consumer spending, as measured by personal consumption expenditures, climbed 3.1% in the fourth quarter (2.0% in the third quarter). The PCE price index, a measure of inflation, increased 6.3% in the fourth quarter after advancing 5.3% in the third quarter. Gross private domestic investment, which includes nonresidential and residential fixed investment, vaulted 33.5% in the fourth quarter after gaining 12.4% in the third quarter. Nonresidential (business) fixed investment increased 3.1% (1.7% in the third quarter), while residential fixed investment increased 1.0% (-7.7% in the third quarter). Exports jumped 23.6% in the fourth quarter after falling 5.3% in the prior quarter. Imports climbed 17.6% following a 4.7% rise in the third quarter.
  • The Treasury budget posted a notable surplus of $118.7 billion in January, the first monthly surplus since September 2019. By comparison, the budget deficit was $162.8 billion in January 2021. The January 2022 surplus helped shrink the overall cumulative deficit for the first four months of fiscal year 2022 to $259.0 billion, 65.0% lower than the deficit over the same period in fiscal year 2021. So far for fiscal year 2022, individual income tax receipts have risen 43.0% and corporate income tax receipts have increased 32.0%. In January, government expenditures fell 8.0% to $1.78 billion, while receipts rose 28.0% to $1.52 billion. In January, budget outlays fell 37.0% to $346.4 billion, while receipts increased 21.0% to $465.1 billion.
  • Inflation/consumer spending: According to the latest Personal Income and Outlays report for January, personal income rose less than 0.1%, while disposable personal income inched up 0.1% after increasing 0.4% and 0.2%, respectively, in December 2021. Consumer spending increased 2.1% following a 0.8% decrease in December. Consumer prices climbed 0.6% in January after advancing 0.5% in December. Consumer prices have risen 6.1% since January 2021. Prices for energy goods and services increased 1.1% in January and 25.9% over the past 12 months. Food prices rose 0.9% in January and 6.7% since January 2021.
  • The Consumer Price Index climbed 0.6% in January, the same increase as in the previous month. Since January 2021, the CPI has risen 7.5% — the largest 12-month gain since February 1982. Price growth was broad based, with most major categories showing an increase, led by fuel oil (9.5%) and electricity (4.2%). Prices for food rose 0.9% in January. Energy prices increased 0.9%, although gasoline prices dipped 0.8%. Prices for new cars were flat, but used-car prices rose 1.5%. Over the last 12 months, energy prices have risen 27.0%, driven higher by gasoline prices (40.0%) and fuel oil (46.5%). Food prices have increased 7.0%, while prices for used cars and trucks have climbed 40.5%.
  • Prices that producers receive for goods and services jumped 1.0% in January following a 0.4% increase in December 2021. Producer prices have increased 9.7% since January 2021. Prices less foods, energy, and trade services increased 0.9% in January, the largest increase since rising 1.0% in January 2021. For the year, prices less foods, energy, and trade services moved up 6.9%. Prices for services increased 0.7%. A major factor in the January increase in the prices for services was hospital outpatient care prices, which rose 1.6%. Prices for goods rose 1.3%, as prices for motor vehicles and equipment rose 0.7%.
  • Housing: Sales of existing homes rose 6.7% in January, rebounding from a 3.8% decrease the previous month. Despite the January increase, existing home sales were still 2.3% under the January 2021 estimate. The median existing-home price was $350,300 in January, down from $358,000 in December 2021 and 15.4% lower than January 2021 ($303,600). Unsold inventory of existing homes represents a 1.6-month supply at the current sales pace, down from 1.7 months in December. Sales of existing single-family homes increased 6.5% in January after falling 4.3% the previous month. Since January 2021, sales of existing single-family homes have fallen 2.4%. The median existing single-family home price was $357,100 in January, down from $364,300 in December.
  • Sales of new single-family homes fell 4.5% in January after advancing 11.9% in December 2021. The median sales price of new single-family houses sold in January was $423,300 ($395,500 in December). The January average sales price was $496,900 ($482,300 in December). The inventory of new single-family homes for sale in January represented a supply of 6.1 months at the current sales pace, up from December’s 5.6-month supply. Sales of new single-family homes in January, 2022 were 19.3% below the January 2021 estimate.
  • Manufacturing: Industrial production increased 1.4% in January following a 0.1% decline in December 2021. In January, manufacturing rose 0.2% and mining increased 1.0%, while utilities jumped 9.9% after a surge in demand for heating. Total industrial production in January was 4.1% higher than it was a year earlier and 2.1% above its pre-pandemic (February 2020) reading. Since January 2021, manufacturing has risen 2.5%, mining has jumped 8.2%, and utilities have increased 9.3%.
  • January saw new orders for durable goods increase 1.6% after increasing 1.2% (revised) in December. Excluding transportation, new orders increased 0.7% in January. Excluding defense, new orders increased 1.6%. Transportation equipment contributed to the increase in new orders, climbing 3.4% in January. Over the last 12 months, new orders for durable goods increased 16.5%.
  • Imports and exports: Both import and export prices jumped higher in January. Import prices rose 2.0% after decreasing 0.4% in the prior month. The January rise in import prices was the largest monthly increase since April 2011. For the 12 months ended in January 2022, prices for imports have advanced 10.8%. Excluding import fuel, import prices increased 1.4% in January — the largest one-month advance since January 2002. Higher prices for nonfuel industrial supplies and materials; foods, feeds, and beverages; capital goods; consumer goods; and automotive vehicles contributed to the January increase in nonfuel import prices. Import fuel prices rose 9.3% in January, driven higher by higher petroleum and natural gas prices. Import fuel prices have advanced 60.3% over the past 12 months. Export prices rose 2.9% in January after falling 1.6% in December 2021. The January advance in export prices was the largest since January 1989. Higher prices for both agricultural and nonagricultural exports in January contributed to the overall increase in U.S. export prices. Export prices have risen 15.1% since January 2021.
  • The international trade in goods deficit was $107.6 billion in Janury, up $7.2 billion, or 7.1%, from December. Exports of goods were $154.8 billion in January, $2.8 billion less than in December. Imports of goods were $262.5 billion, $4.4 billion more than December imports.
  • The latest information on international trade in goods and services, released February 8, is for December 2021 and shows that the goods and services trade deficit rose by $1.4 billion to $80.7 billion from the November 2021 deficit. December exports were $228.1 billion, $3.4 billion more than November exports. December imports were $308.9 billion, $4.8 billion more than November imports. For 2021, the goods and services deficit increased $182.4 billion, or 27.0%, from the same period in 2020. Exports increased $394.1 billion, or 18.5%. Imports increased $576.5 billion, or 20.5%.
  • International markets: The Russia-Ukraine crisis shook the globe since the Russian military operation against Ukraine began on Thursday, February 24. Several countries, including Great Britain and Japan, along with the European Union, imposed sanctions against Russia and its leadership. Benchmark indexes in Europe and Asia fell and oil prices surged in the immediate aftermath of Russia’s advance into the Ukraine. The FTSE 100 in London fell 2.5%, the German DAX dropped 4.0%, the Nikkei 225 in Japan dipped 1.8%, and the CAC in Paris lost 3.6%. Overall, for the markets in February, the STOXX Europe 600 Index dropped 2.6%; the United Kingdom’s FTSE gained 0.3%; Japan’s Nikkei 225 Index dipped 1.0%; and China’s Shanghai Composite Index climbed 2.7%.
  • Consumer confidence: The Conference Board Consumer Confidence Index® fell slightly in February following a decline in January. The index stands at 110.5, down from 111.1 in January. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, improved to 145.1 in February, up from 144.5 in January. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, declined to 87.5 in February, down 88.8 in January.

Eye on the Month Ahead

The Federal Open Market Committee meets in March for the first time since January. It is expected that the Committee with raise the federal funds target rate by at least 25 basis points — the first such increase since December 2018. A bump in interest rates, coupled with the Russia-Ukraine conflict, is likely to impact economic and market growth, but to what extent and for how long is difficult to project.

What I’m Watching This Week – 28 February 2022

The Markets (as of market close February 25, 2022)

Stocks closed mostly higher last week, despite a tumultuous week with the Russian invasion of Ukraine. Of the benchmark indexes listed here, only the Dow and the Global Dow closed the week in the red. The Russell 2000, the Nasdaq, and the S&P 500 each posted solid gains. While the world reacted to the conflict in Eastern Europe, traders sought domestic stocks, driving values higher. Apparently, some investors may be viewing the Russia-Ukraine conflict as a reason to believe the Federal Reserve may not be quite so quick to jack up interest rates. However, with prices continuing to rise even before the turmoil in Europe, inflationary pressures are likely to accelerate due to disruptions caused by the war, which would seem to increase the likelihood of a more aggressive stance by the Fed. Much is still to be determined in the weeks ahead.

Growing tensions between Russia and Ukraine pulled stocks lower last Tuesday to start the holiday-shortened week. Both the Russell 2000 and the Dow closed down 1.4%, while the Nasdaq lost 1.2%. The S&P 500 and the Global Dow each fell 1.0%. Ten-year Treasury yields rose, while the dollar was flat. Crude oil prices increased to $92.27 per barrel. Earlier on Tuesday, NATO Secretary-General Jens Stoltenberg said that Russia’s recognition of two separatist regions in Ukraine could be viewed as a prelude to a large-scale assault. In response, several Western leaders unveiled a series of sanctions targeting Russian banks and financial firms.

As Russia moved closer to a full-scale invasion of Ukraine last Wednesday, tensions mounted globally. Sanctions were either threatened or imposed by the United States and other Western countries, prompting retaliatory rhetoric from Russia. Then, late Wednesday, as anticipated, Russia launched a military attack on Ukraine. Unsurprisingly, stocks extended losses. The Nasdaq shed 2.6% as technology stocks sold off amid fears of Russian cyberattacks. The S&P 500 fell 1.8%, falling deeper into correction territory. The Russell 2000 lost 1.8%, the Dow dropped 1.4%, and the Global Dow slid 0.9%. Yields on 10-year Treasuries rose nearly 3 basis points to 1.97%. The dollar was little changed. Crude oil prices surged, nearing $100.00 per barrel. Gold prices reached $1,910.80 per troy ounce, the highest value in more than a year.

Equities rebounded last Thursday following President Biden’s announcement of new sanctions against Russia after its full-scale invasion of Ukraine. Tech stocks, which had been hard-hit, led the surge, pulling the Nasdaq up 3.3%. The S&P 500 advanced 1.5%, while the Dow gained 0.3%. The small caps of the Russell 2000 advanced 2.7%. The Global Dow fell 2.3%. Along with technology, communication services and consumer discretionary moved higher. Ten-year Treasury yields declined, closing the day at 1.96%. Crude oil prices and the dollar rose. Not unexpectedly, the Cboe Volatility Index reached its highest level in 15 months.

Despite global economic turmoil caused by the ongoing Russian onslaught of Ukraine, domestic markets seemed to be impervious to that tumult. Each of the benchmark indexes posted solid gains last Friday, led by the Dow (2.5%), the Russell 2000 (2.3%), the S&P 500 (2.2%), and the Nasdaq (1.6%). Even the Global Dow advanced nearly 3.0% by the close of trading. And while Brent crude oil prices surged, New York Mercantile (CL=F) crude oil prices dropped nearly 1.0% to close the day a little over $92.00 per barrel. The dollar and gold prices also fell, while 10-year Treasury yields advanced.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 2/25Weekly ChangeYTD Change
DJIA36,338.3034,079.1834,058.75-0.06%-6.27%
Nasdaq15,644.9713,548.0713,694.621.08%-12.47%
S&P 5004,766.184,348.874,384.650.82%-8.00%
Russell 20002,245.312,009.332,040.931.57%-9.10%
Global Dow4,137.634,154.924,076.57-1.89%-1.48%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries1.51%1.93%1.98%5 bps47 bps
US Dollar-DXY95.6496.0796.550.50%0.95%
Crude Oil-CL=F$75.44$91.56$92.040.52%22.00%
Gold-GC=F$1,830.30$1,898.40$1,889.70-0.46%3.25%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • The economy accelerated at an annualized rate of 7.0% in the fourth quarter of 2021, according to the second estimate of gross domestic product. Major contributors to the fourth-quarter growth were private domestic investment (+33.5%), exports (+23.6%), and personal consumption expenditures (+3.1%). The personal consumption expenditures price index, a measure of the prices paid for consumer goods and services, increased 6.3%.
  • Personal income and disposable (after-tax) personal income increased minimally in January, according to the latest data from the Bureau of Economic Analysis. While compensation increased 0.5%, it was partially offset by a decrease in government social benefits. On the other hand, consumer spending, as measured by personal consumption expenditures, rose 2.1% in January. Inflationary pressures continued to mount as consumer prices for goods and services advanced 0.6%. Over the past 12 months, prices have risen 6.1%; energy prices increased 25.9% while food prices rose 6.7%.
  • January saw new orders for durable goods increase 1.6%, which followed a 1.2% increase in December 2021. Orders for transportation equipment led the increase, advancing 3.4% in January. Shipments of durable goods rose 1.2%, while unfilled orders climbed 0.9%. Nondefense capital goods used in the production of consumer goods increased 4.2%, while defense capital goods advanced 15.7%.
  • Sales of new single-family homes fell 4.5% in January following a robust December 2021. While sales may have dipped, new home prices did not. The median sales price of new houses sold in January was $423,300, a 7.0% increase over December’s median sales price. The average sales price in January rose 3.1% to $496,900. The estimate of new houses for sale at the end of January represented a supply of 6.1 months, up from December’s estimate of 5.6 months.
  • The national average retail price for regular gasoline was $3.530 per gallon on February 21, $0.043 per gallon more than the prior week’s price and $0.897 higher than a year ago. The Gulf Coast and East Coast prices each increased more than $0.05 to $3.24 per gallon and $3.50 per gallon, respectively; the Midwest price increased more than $0.03 to $3.35 per gallon; the West Coast price increased more than $0.04 to $4.23 per gallon; and the Rocky Mountain price increased nearly $0.02 to $3.34 per gallon. As of February 21, residential heating oil prices averaged more than $3.94 per gallon, more than $0.01 per gallon below the prior week’s price but almost $1.14 per gallon higher than last year’s price at this time. Residential propane prices averaged nearly $2.85 per gallon, more than $0.01 per gallon above last week’s price and more than $0.35 per gallon above last year’s price.
  • For the week ended February 19, there were 232,000 new claims for unemployment insurance, a decrease of 17,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended February 12 was 1.1%, unchanged from the previous week’s revised rate. The advance number of those receiving unemployment insurance benefits during the week ended February 12 was 1,476,000, a decrease of 112,000 from the previous week’s level, which was revised down by 5,000. This is the lowest level for insured unemployment since March 14, 1970, when it was 1,456,000. States and territories with the highest insured unemployment rates for the week ended February 5 were California (2.7%), Alaska (2.6%), Illinois (2.5%), Minnesota (2.5%), New Jersey (2.5%), Rhode Island (2.4%), the Virgin Islands (2.4%), Massachusetts (2.3%), New York (2.3%), and Montana (2.0%). The largest increases in initial claims for the week ended February 12 were in Missouri (+7,253), Ohio (+5,392), Kentucky (+4,555), Tennessee (+1,737), and Illinois (+1,488), while the largest decreases were in Pennsylvania (-1,688), California (-1,618), Wisconsin (-1,034), New Jersey (-941), and Connecticut (-747).

Eye on the Week Ahead

Employment data for February is out this week. Job growth has been solid so far this year, with 467,000 new jobs added in January. Wages rose 0.7% in January and have risen 5.7% since January 2021.

What I’m Watching This Week – 22 February 2022

The Markets (as of market close February 18, 2022)

Last week, Wall Street reacted to the ongoing Russia-Ukraine conflict by moving from stocks to bonds, the dollar, and gold. Investors were faced with rising fears that a Russian invasion of the Ukraine will engulf Europe and the United States, worsen global supply bottlenecks, and further accelerate inflation. Stocks continued to track lower despite solid fourth-quarter earnings growth. Each of the market sectors ended the week lower, with the exception of consumer staples, which managed to eke out a 0.1% gain. Information technology dipped over 1.0%, helping to pull the Nasdaq down 1.8% for the week. The Global Dow and the Dow led the declines among the benchmark indexes listed here. Long-term Treasury yields slipped two basis points. Crude oil prices fell nearly $2.00 to $91.56 per barrel. Gold prices continued to show strength, advancing for the second consecutive week.

Stocks road a wave of highs and lows last Monday, ultimately closing with modest losses. Ukraine worries and rising bond yields drove several of the benchmark indexes listed here lower. The Global Dow fell 1.5%, followed by the Dow and the Russell 2000, each of which lost 0.5%. The S&P 500 dipped 0.4%, while the Nasdaq was unable to maintain a mid-day surge, eventually ending the day flat. Ten-year Treasury yields reached 1.99% by the end of trading. Crude oil prices continued to march toward $100.00 per barrel, ending the day at around $94.88 per barrel. The dollar advanced against a basket of currencies. Consumer discretionary and communication services were the only market sectors to advance, while energy fell 2.24%.

U.S. equities closed notably higher last Tuesday, reversing a three-day skid on signs of a possible easing of tensions between Russia and the Ukraine. The Russell 2000 advanced 2.8%, followed by the Nasdaq, which gained 2.5%. The S&P 500 (1.6%), the Dow (1.2%), and the Global Dow (1.0%) also climbed higher. Ten-year Treasury yields rose eight basis points to 2.04%. The dollar, crude oil prices, and gold prices fell.

Last Wednesday saw stocks end the day mixed, with the S&P 500 (0.1%), the Russell 2000 (0.1%), and the Global Dow (0.4%) edging higher, while the Dow (-0.2%) and the Nasdaq (-0.1%) dipped lower. Ten-year Treasury yields closed flat. Crude oil prices fell to $93.66 per barrel. The dollar also declined, while gold prices advanced.

Stocks tumbled lower last Thursday after President Joe Biden warned that a Russian invasion of the Ukraine could happen within the next several days. Among the market sectors, only consumer staples and utilities closed the day ahead. Several sectors fell more than 2.0%, including communication services, consumer discretionary, financials, and information technology. The benchmark indexes closed sharply lower, with the Nasdaq falling 2.9%, closely followed by the Russell 2000, which declined 2.5%. The S&P 500 (-2.1%), the Dow (-1.8%), and the Global Dow (-1.0%) also dipped lower. Investors apparently moved to bonds, driving prices higher and yields lower. Ten-year Treasury yields fell seven basis points to 1.97%. The dollar inched higher, while crude oil prices decreased to $91.61 per barrel. Last Friday saw bond prices rise and stock values fall on fears of an imminent military conflict between Russia and the Ukraine. The Nasdaq again led the declines among the benchmark indexes listed here, dropping 1.2%, followed by the Russell 2000 (-1.0%), the Global Dow (-0.8%), the S&P 500 (-0.7%), and the Dow (-0.7%). Ten-year Treasury yields slid to 1.93%. Crude oil prices also dipped lower, while the dollar inched higher.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 2/18Weekly ChangeYTD Change
DJIA36,338.3034,738.0634,079.18-1.90%-6.22%
Nasdaq15,644.9713,791.1513,548.07-1.76%-13.40%
S&P 5004,766.184,418.644,348.87-1.58%-8.76%
Russell 20002,245.312,030.152,009.33-1.03%-10.51%
Global Dow4,137.634,237.744,154.92-1.95%0.42%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries1.51%1.95%1.93%-2 bps42 bps
US Dollar-DXY95.6496.0496.070.03%0.45%
Crude Oil-CL=F$75.44$93.72$91.56-2.30%21.37%
Gold-GC=F$1,830.30$1,863.10$1,898.401.89%3.72%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Producer prices jumped 1.0% in January, the largest increase since rising 1.0% a year earlier. For the 12 months ended in January 2022, producer prices have moved up 9.7%. Excluding food and energy, producer prices increased 0.8% in January and 8.3% since January 2021. Prices for both services and goods rose last month. Prices for services advanced 0.7% in January, the same as in December. A major factor in the January increase in the prices for services was hospital outpatient care prices, which rose 1.6%. Prices for goods climbed 1.3% in January after declining 0.1% in December. Within the goods category in January, prices for energy rose 2.5%, while prices for motor vehicles and equipment rose 0.7%. Prices for diesel fuel, gasoline, beef and veal, dairy products, and jet fuel also increased. With prices at the producer level surging in January, the extent to which this appreciation is passed on to consumers remains to be seen.
  • Sales by retail and food services stores advanced 3.8% in January and 13.0% since January 2021. Retail trade sales were up 4.4% in January from December and have risen 11.4% over the past 12 months. Sales at several businesses increased in January, including motor vehicle and parts dealers (5.7%), building material and garden equipment and supplies dealers (4.1%), food and beverage stores (1.1%), furniture stores (7.2%), general merchandise stores (3.6%), and nonstore (online) retailers (14.5%). Sales for food services and drinking places dipped 0.9% in January but rose 27.0% since January 2021. Gasoline station sales fell 1.3% in January but jumped 33.4% over the last 12 months.
  • January saw both import and export prices increase following declines in December. Import prices advanced 2.0% last month, the largest increase since April 2011. Import prices are up 10.8% over the past year. Leading the January rise in import prices was a 9.3% increase in import fuel prices, which have climbed 60.3% over the past 12 months. Prices for nonfuel imports increased 1.4% in January and have not recorded a monthly decline since November 2020. The January advance was the largest one-month rise since January 2002. Higher prices for nonfuel industrial supplies and materials; foods, feeds, and beverages; capital goods; consumer goods; and automotive vehicles all contributed to the January increase in nonfuel import prices. Export prices increased 2.9% in January, which was the largest one-month rise since January 1989. Export prices have advanced 15.1% since January 2021. Agricultural exports rose 3.0% last month, while nonagricultural export prices increased 2.9%.
  • The number of issued residential building permits rose 0.7% in January, largely driven by a 6.8% jump in single-family authorizations. Total building permits issued were 0.8% above the January 2021 rate. Housing starts fell 4.1% last month but are 0.8% higher than the rate a year earlier. Single-family housing starts also dipped, down 5.6% in January. Total housing completions in January fell 5.2% from the previous month’s figures and are 6.2% below the January 2021 pace. In January, single-family housing completions were 7.3% under the December estimate.
  • Existing home sales advanced 6.7% in January following a December decline. Year over year, existing home sales are down 2.3%. Total housing inventory of existing homes slid 2.3% last month, sitting at a scant 1.6-month supply at the current sales pace. The median existing home price for homes in January was $350,300, down from $358,000 in December but up 15.4% from January 2021 ($303,600). Single-family home sales jumped 6.5% in January yet are down 2.4% from January 2021. The median existing single-family home price was $357,100 in January, down from December’s median price of $364,300 but up 15.9% from January 2021.
  • In January, total industrial production increased 1.4%. Manufacturing output and mining production rose 0.2% and 1.0%, respectively. Manufacturing output is up 2.5% over the past 12 months. A surge in demand for heating in January sent utilities up 9.9%, the largest jump in the history of the index. The index for mining rose 1.0% in January. Total industrial production in January was 4.1% higher than its year-earlier level and 2.1% above its pre-pandemic (February 2020) reading.
  • The national average retail price for regular gasoline was $3.487 per gallon on February 14, $0.043 per gallon more than the prior week’s price and $0.986 higher than a year ago. The Gulf Coast and East Coast prices each increased more than $0.06 to $3.19 per gallon and $3.45 per gallon, respectively; the Midwest price increased more than $0.03 to $3.32 per gallon; and the West Coast price increased more than $0.01 to $4.19 per gallon. The Rocky Mountain price decreased less than $0.01, remaining virtually unchanged at $3.33 per gallon. As of February 14, 2022, residential heating oil prices averaged nearly $3.96 per gallon, $0.07 per gallon above the prior week’s price and nearly $1.22 per gallon higher than last year’s price at this time. Residential propane prices averaged nearly $2.84 per gallon, more than $0.01 per gallon above last week’s price and more than $0.54 per gallon above last year’s price.
  • For the week ended February 12, there were 248,000 new claims for unemployment insurance, an increase of 23,000 from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended February 5 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended February 5 was 1,593,000, a decrease of 26,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended January 29 were Alaska (2.7%), California (2.7%), New Jersey (2.6%), Minnesota (2.5%), Rhode Island (2.4%), Massachusetts (2.3%), New York (2.3%), and Illinois (2.2%). The largest increases in initial claims for the week ended February 5 were in Michigan (+2,884), New Jersey (+406), Kansas (+309), Delaware (+235), and Maryland (+148), while the largest decreases were in California (-4,247), Kentucky (-3,962), Tennessee (-2,916), Illinois (-2,303), and Indiana (-1,760).

Eye on the Week Ahead

The second estimate for the fourth-quarter gross domestic product is available this week. The first estimate showed that the economy expanded at an annualized rate of 6.9%. Another important source of economic information is out this week with the release of the personal income and outlays report for January. The personal consumption price index, a measure of inflation relied upon by the Federal Reserve, rose 5.8% over the 12 months ended in December 2021.

What I’m Watching This Week – 14 February 2022

The Markets (as of market close February 11, 2022)

The major benchmark indexes closed last week lower. Rising tensions over the Russia-Ukraine situation coupled with rising inflation made investors a bit skittish towards stocks. A higher-than-expected jump in the Consumer Price Index added to jitters over an accelerated tightening of the Federal Reserve’s monetary policy. The Nasdaq, the S&P 500, and the Dow lost value last week, while the Russell 2000 and the Global Dow advanced. As of late Friday afternoon, concerns increased that Russia could invade Ukraine “any day now.” An invasion would likely spur sanctions against Russia’s exports of oil and gas, causing supply to decrease and prices to rise. Crude oil prices rose nearly 1.7% last week following Friday’s 4.0% jump in the price per barrel. Ten-year Treasury yields were volatile last week, reaching 2.0%, only to drop back down to 1.95% by the end of the week. Gold prices rose for the second consecutive week. Meanwhile, fourth-quarter earnings data continued to be mainly positive, with 78% of the S&P 500 companies exceeding earnings estimates.

Last Monday saw Wall Street end lower as stocks gave back gains from earlier in the day. The Nasdaq fell 0.6%, while declines in communication services and information technology dragged the S&P 500 (-0.4%) lower. The Dow was flat, while the small caps of the Russell 2000 and the Global Dow each advanced 0.5%. Crude oil prices extended a streak of six consecutive session advances after climbing 1.83% to $91.92 per barrel. Gold prices also continued to advance, while the dollar and 10-year Treasury yields declined.

Stocks rose last Tuesday, even as bond yields approached their highest levels since November 2019. Ten-year Treasuries jumped 4 basis points to close at 1.95%. Information technology, financials, industrials, and materials each increased by at least 1.0%, helping to push up the benchmark indexes listed here. The Russell 2000 gained for the second consecutive session after advancing 1.6%. The Nasdaq rose 1.3%. The Dow climbed 1.1%. The S&P 500 climbed 0.8% and the Global Dow added 0.7%. Crude oil prices declined, falling to $89.78 per barrel. The dollar inched higher.

Tech shares led a broad-based stock market rally last Wednesday. Megacaps helped drive the Nasdaq up 2.1% while the S&P 500 advanced 1.5% as both indexes posted their biggest daily gains this month. The Russell 2000 continued its upward trend after adding 1.9% last Wednesday. The Global Dow gained 1.0%. Ten-year Treasury yields retreated from the prior day’s advance, closing at 1.92%. The dollar was flat, while crude oil prices rose about $0.19 to $89.97 per barrel.

Each of the benchmark indexes listed here lost ground last Thursday on the heels of the largest annual increase in the Consumer Price Index (7.5%) since February 1982. The noteworthy jump in price inflation adds to the likelihood that the Federal Reserve will be more aggressive in pushing the federal funds rate higher beginning in March. The Nasdaq fell 2.1%, the S&P 500 lost 1.8%, the Russell 2000 slid 1.6%, the Dow dropped 1.5%, and the Global Dow dipped 0.6%. Ten-year Treasury yields jumped 11 basis points to 2.03%. Crude oil prices climbed to $90.02 per barrel. The dollar also advanced.

Stocks closed sharply lower last Friday amid rising Russia-Ukraine tensions. Information technology slumped over 3.0% on the day, pulling the Nasdaq down 2.8%. Energy climbed higher, although the remaining market sectors slid lower. The S&P 500 fell 1.9%. The Dow dropped 1.4%, while both the Russell 2000 and the Global Dow slipped 1.0%. Ten-year Treasury yields continued to bounce up and down, falling to 1.95%. Crude oil prices reached $93.72 per barrel. The dollar advanced.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 2/11Weekly ChangeYTD Change
DJIA36,338.3035,089.7434,738.06-1.00%-4.40%
Nasdaq15,644.9714,098.0113,791.15-2.18%-11.85%
S&P 5004,766.184,500.534,418.64-1.82%-7.29%
Russell 20002,245.312,002.362,030.151.39%-9.58%
Global Dow4,137.634,201.864,237.740.85%2.42%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries1.51%1.93%1.95%2 bps44 bps
US Dollar-DXY95.6495.4796.040.60%0.42%
Crude Oil-CL=F$75.44$92.18$93.721.67%24.23%
Gold-GC=F$1,830.30$1,808.00$1,863.103.05%1.79%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • The Consumer Price Index rose 0.6% in January from the previous month and is up 7.5% year over year. Price increases were wide spread last month. In January, increases in prices for food, electricity, and shelter were the largest contributors to the CPI increase. Food prices rose 0.9% in January following a 0.5% increase in December. Energy prices also increased 0.9% over the month, with an increase in prices for electricity being partially offset by declines in gasoline prices. Also of note were price gains in household furnishings and operations, used cars and trucks, medical care, and apparel. Core prices, less food and energy, also rose 0.6% in January and are up 6.0% over the past 12 months, the largest 12-month increase since the period ended in August 1982.
  • The Treasury budget for January posted a surplus of $118.7 billion, the first monthly surplus since September 2019. The January 2021 budget ran at a deficit of $162.8 billion. Compared to January 2021, budget expenditures for January 2022 were down 37.0%, while government receipts were up 21.0%. Through the first four months of the fiscal year, the budget deficit is $259.0 billion, 65.0% lower than the deficit over the same four months of the previous fiscal year, as government expenditures fell 8.0% while receipts rose 28.0%. Over the first four months of this fiscal year compared to the same period for fiscal 2021, individual income tax receipts are up 43.0% and corporate tax receipts increased 32.0%.
  • The goods and services trade deficit was $80.7 billion in December 2021, $1.4 billion, or 1.8%, above the November deficit. In December, exports rose 1.5% and imports increased 1.6%. For 2021, the goods and services deficit increased $182.4 billion, or 27.0%, from 2020. Exports increased $394.1 billion, or 18.5%. Imports increased $576.5 billion, or 20.5%. Of particular note in December, the U.S. trade deficit with China increased by $6.0 billion, the trade deficit with South Korea increased by $1.4 billion, while the trade deficit with the European Union decreased $3.0 billion.
  • The national average retail price for regular gasoline was $3.444 per gallon on February 7, $0.076 per gallon more than the prior week’s price and $0.983 higher than a year ago. The Midwest price increased more than $0.10 to $3.29 per gallon, the Gulf Coast price increased more than $0.09 to $3.12 per gallon, the East Coast price increased nearly $0.08 to $3.39 per gallon, and the West Coast price increased more than $0.02 to $4.18 per gallon. The Rocky Mountain price remained unchanged at $3.33 per gallon. As of February 7, 2022, residential heating oil prices averaged nearly $3.89 per gallon, $0.11 per gallon above the prior week’s price and nearly $1.22 per gallon higher than last year’s price at this time. Residential propane prices averaged nearly $2.83 per gallon, almost $0.045 per gallon above last week’s price and more than $0.60 per gallon above last year’s price.
  • Weekly claims for unemployment insurance benefits continue to decline. For the week ended February 5, there were 223,000 new claims for unemployment insurance, a decrease of 16,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 29 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 29 was 1,621,000, unchanged from the previous week’s level, which was revised down by 7,000. States and territories with the highest insured unemployment rates for the week ended January 22 were Alaska (2.9%), California (2.7%), Illinois (2.5%), Minnesota (2.5%), New Jersey (2.5%), Rhode Island (2.5%), the Virgin Islands (2.5%), New York (2.4%), Massachusetts (2.3%), and Puerto Rico (2.1%). The largest increases in initial claims for the week ended January 29 were in Pennsylvania (+2,735), Georgia (+1,551), Michigan (+1,238), Indiana (+939), and Texas (+785), while the largest decreases were in Ohio (-4,847), California (-2,595), Kentucky (-2,318), Utah (-1,870), and Alabama (-1,343).

Eye on the Week Ahead

Inflation and housing information take the stage this week. Inflationary indicators available this week include the latest Producer Price Index, import and export prices, and the retail sales report. Producer prices slowed in December, increasing only 0.2%. However, since December 2020, producer prices rose nearly 10.0%. Both import and export prices have also been on the rise. For the 12 months ended in December 2021, import prices climbed 10.4% and export prices advanced 14.7%. Sales at the retail level actually receded in November and December 2021. However, retail sales increased 19.3% in 2021. The housing sector has been a mixed bag of late, with existing home sales falling 4.6% in December, while new home sales rose. That trend is likely to continue as December saw building permits (+9.1%) and housing starts (+1.4%) increase, which should increase the inventory of new homes for sale.

What I’m Watching This Week – 7 February 2022

The Markets (as of market close February 4, 2022)

Last week was notable for a stronger-than-expected jobs report and mixed fourth-quarter earnings data. Stock values rose and fell throughout the week, ultimately closing higher. Crude oil prices rose for the seventh consecutive week, as prices near an eight-year high. A cold snap in the United States and concerns about the Ukrainian situation contributed to the raise in the prices of natural gas and oil. Each of the benchmark indexes listed here ended the week higher, led by the Nasdaq, which had one of its worst days last Thursday, only to be followed by one of its best performances. The large caps of the S&P 500 and the Dow pushed higher. The Global Dow gained over 2.0%, and the small caps of the Russell 2000 advanced 1.7%. The dollar fell, while gold prices climbed higher.

Stocks pushed higher last Monday for the second consecutive session as dip buyers snatched bargains in beaten-down growth stocks. The Nasdaq led the charge, climbing 3.4%, followed by the Russell 2000 (3.1%), the S&P 500 (1.9%), the Dow (1.2%), and the Global Dow (1.0%). Gains were noted across each of the market sectors, with information technology and communication services leading the way. Ten-year Treasury yields were flat, while the dollar dipped. Crude oil prices climbed 1.5% to $88.15 per barrel.

Last Tuesday, Wall Street enjoyed its best three-day rally since 2020. Strong fourth-quarter earnings data from some major corporations helped bolster investor confidence. Each of the benchmark indexes advanced, with the Global Dow (1.4%) and the Russell 2000 (1.1%) gaining the most, followed by the Dow and the Nasdaq, each of which added 0.8%. The S&P 500 rose 0.7%. Energy, financials, industrials, communication services, and materials led the market sectors. Ten-year Treasury yields climbed to 1.8%, crude oil prices edged higher, while the dollar dipped.

Stocks closed generally higher for the fourth consecutive session last Wednesday, with only the small caps of the Russell 2000 lagging. The S&P 500 (0.9%), the Dow (0.6%), the Global Dow (0.6%), and the Nasdaq (0.5%) each pushed higher. culminating in the biggest four-day rally since November 2020. Crude oil prices slipped to $87.93 per barrel, the dollar fell nearly 0.5%, and 10-year Treasuries declined to 1.77%. Leading the market sectors were communication services, real estate, utilities, health care, and consumer staples.

Last Thursday saw the biggest tech sell-off since the fall of 2020, ending a four-day rally. The Nasdaq fell 3.7% as a major technology company saw its shares fall more than 26% following its underwhelming fourth-quarter earnings results. Adding to investor worries was the latest jobless claims report, which showed 238,000 new claims for unemployment insurance were filed last week. The S&P 500 declined 2.4%, the Russell 2000 lost 1.9%, the Dow edged 1.45% lower, and the Global Dow dipped 0.8%. Ten-year Treasury yields climbed six basis points to 1.82%. Crude oil prices rose above $90.00 per barrel, while the dollar slid lower.

A strong jobs report and favorable earnings data from a major tech company helped power stocks higher last Friday. Ten-year Treasury prices fell, driving yields up to 1.93% as it looks more likely that the Federal Reserve will raise interest rates by 50 basis points in March. Among the market indexes listed here, only the Dow failed to gain ground, dipping less than 0.1 percentage point. The Nasdaq gained 1.6%, the Russell 2000 rose 0.6%, the S&P 500 edged up by 0.5%, while the Global Dow ended flat. Consumer discretionary (3.7%), financials (1.7%), and energy (1.6%) led the market sectors. Crude oil prices continued to climb, reaching $92.20 per barrel late Friday. The dollar was mixed on the day.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 2/4Weekly ChangeYTD Change
DJIA36,338.3034,725.4735,089.741.05%-3.44%
Nasdaq15,644.9713,770.5714,098.012.38%-9.89%
S&P 5004,766.184,431.854,500.531.55%-5.57%
Russell 20002,245.311,968.512,002.361.72%-10.82%
Global Dow4,137.634,113.384,201.862.15%1.55%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries1.51%1.78%1.93%15 bps42 bps
US Dollar-DXY95.6497.2395.47-1.81%-0.18%
Crude Oil-CL=F$75.44$87.23$92.185.67%22.19%
Gold-GC=F$1,830.30$1,790.40$1,808.000.98%-1.22%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • Employment rose by a whopping 467,000 in January. In addition, December’s totals were revised significantly higher, rising from an initial estimate of 199,000 to a revised figure of 510,000. The unemployment rate rose by 0.1 percentage point to 4.0%. Employment growth continued in leisure and hospitality, professional and business services, retail trade, and transportation and warehousing. The number of unemployed rose by about 200,000 to 6.5 million. Year over year, the unemployment rate is down by 2.4 percentage points, and the number of unemployed persons declined by 3.7 million. In February 2020, prior to the coronavirus (COVID-19) pandemic, the unemployment rate was 3.5%, and unemployed persons numbered 5.7 million. In January, the labor force participation rate held at 62.2% (61.9% in December), and the employment-population ratio was little changed at 59.7% (59.5% in December). Both measures are up from a year earlier but remain below their February 2020 levels (63.4% and 61.2%, respectively). The number of persons not in the labor force who currently want a job was little changed at 5.7 million in January. This measure decreased by 1.3 million since January 2021 but is 708,000 higher than in February 2020. In January, the share of employed persons who teleworked because of the coronavirus pandemic increased to 15.4%. In January, 6.0 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. This measure is considerably higher than the level of 3.1 million in December. In January, average hourly earnings increased $0.23, or 0.7%, to $31.63. Over the past 12 months, average hourly earnings have increased by 5.7%. Last month, the average work week fell 0.2 hours to 34.5 hours.
  • Manufacturing slowed in January, according to the latest IHS Markit purchasing managers’ survey. The IHS Markit U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) posted 55.5 in January, down from 57.7 in December. This is the lowest reading since October 2020. Data indicated that output growth was muted and demand conditions softened, with new orders rising at the slowest pace since September 2020. The rate of cost inflation eased to the softest in eight months, however, as firms also moderated the pace at which selling prices increased. Contributing to the weakened output was the impact of the Omicron variant, raw material and labor shortages, and a reluctance among some clients to place orders amid hikes in selling prices and longer lead times.
  • Business activity in January also slowed in the services sector. The IHS Markit U.S. Services PMI Business Activity Index registered 51.2, down notably from 57.6 in December. The rate of increase in output in January was the slowest in the past 18 months. Business activity in the business sector was hampered by the spread of the Omicron variant, as domestic and foreign demand conditions weakened. In addition, companies passed higher costs on to clients despite signs that cost pressures eased during January.
  • According to the latest Job Openings and Labor Turnover Summary, the number of job openings rose by less than 200,000 in December 2021. The number of hires dropped by 333,000 to 6.3 million, and the number of separations decreased by 305,000 to 5.9 million. Job openings rose in several industries, with the largest increases coming in accommodation and food services (+133,000), information (+40,000), and nondurable goods manufacturing and state and local government education (+31,000 each). Job openings decreased in finance and insurance (-89,000) and in wholesale trade (-48,000). The number of quits edged down in December to 4.3 million (-161,000) following a series high of 4.5 million in November. In December, the number of layoffs and discharges fell nearly 100,000 to 1.2 million, a series low.
  • The national average retail price for regular gasoline was $3.368 per gallon on January 31, $0.045 per gallon more than the prior week’s price and $0.959 higher than a year ago. The East Coast and Midwest prices each increased more than $0.06 to $3.31 per gallon and $3.19 per gallon, respectively. The Gulf Coast price increased $0.02 to $3.03 per gallon, and the Rocky Mountain price increased less than $0.01, remaining virtually unchanged at $3.33 per gallon. The West Coast price remained unchanged at $4.16 per gallon. As of January 31, 2022, residential heating oil prices averaged nearly $3.78 per gallon, almost $0.11 per gallon above last week’s price and nearly $1.18 per gallon higher than last year’s price at this time. Residential propane prices averaged nearly $2.78 per gallon, almost $0.04 per gallon above last week’s price and more than $0.57 per gallon above last year’s price.
  • For the week ended January 29, there were 238,000 new claims for unemployment insurance, a decrease of 23,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 22 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 22 was 1,628,000, a decrease of 44,000 from the prior week’s level, which was revised down by 3,000. States and territories with the highest insured unemployment rates for the week ended January 15 were Alaska (3.0%), the Virgin Islands (3.0%), New Jersey (2.6%), California (2.5%), Minnesota (2.5%), New York (2.4%), Rhode Island (2.4%), Illinois (2.3%), Kentucky (2.3%), and Massachusetts (2.3%). The only increase in initial claims for the week ended January 22 was in Alabama (+628), while the largest decreases were in California (-8,078), Pennsylvania (-7,967), New York (-5,722), New Jersey (-4,818), and Kentucky (-4,049).

Eye on the Week Ahead

The next round of data on inflation begins this week with the release of the Consumer Price Index for January. Consumer prices rose 0.5% in December and 7.0% in 2021. Little change is expected in price pressure, at least through March, when the Federal Reserve is expected to raise interest rates for the first time since 2018 in what could be several such advances throughout this year.

Monthly Market Review – January 2022

The Markets (as of market close January 31, 2022)

Stocks ended January lower as investors dealt with concerns over inflation, the prospects of rising interest rates, and the pace of global economic recovery. The start of fourth-quarter corporate earnings season in January was positive but not as robust as was seen in December. While the economy advanced at an annualized rate of nearly 7.0% in the fourth quarter, 2022 is expected to see a slowdown triggered by ongoing coronavirus disruptions and fading fiscal support. Escalating tensions between the United States and Russia offered further market agitation.

A late rally wasn’t enough to prevent the major benchmark indexes from closing out one of the worst months since March 2020. Only the Global Dow was able to eke out a January gain. An end-of-month rally helped the Nasdaq avert the sharpest January decline on record. Nevertheless, tech stocks were hit hard in January as investors pondered how rising interest rates might weigh on that sector’s pricey valuations. The small caps of the Russell 2000 dropped more than 9.5%, while the large caps of the S&P 500 (-5.3%) and the Dow (-3.3%) slid lower.

Not surprisingly, most of the market sectors declined in January. Consumer discretionary fell the furthest, losing 9.7%, followed by real estate, which dropped 8.5%. Information technology, health care, and materials ended down 6.9%, while communication services lost 6.4%. Energy showed continued strength, climbing 19.0%. In fact, the price of crude oil climbed 17.0% last month for its biggest January gain in the last 30 years.

Despite the market downturn, there were some positive economic signs. Nearly 200,000 new jobs were added and fourth-quarter GDP advanced 6.9%. However, industrial production slowed, and new orders for durable goods decreased.

January saw the dollar climb higher, while gold prices dropped 1.7%. Prices at the pump rose in January, as the national average retail price for regular gasoline was $3.323 per gallon on January 24, up from the December 27, 2021 price of $3.275 per gallon.

Stock Market Indexes

Market/Index2021 ClosePrior MonthAs of January 31Monthly ChangeYTD Change
DJIA36,338.3036,338.3035,131.86-3.32%-3.32%
Nasdaq15,644.9715,644.9714,239.88-8.98%-8.98%
S&P 5004,766.184,766.184,515.55-5.26%-5.26%
Russell 20002,245.312,245.312,028.45-9.66%-9.66%
Global Dow4,137.634,137.634,161.110.57%0.57%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries1.51%1.51%1.78%27 bps27 bps
US Dollar-DXY95.6495.6496.641.05%1.05%
Crude Oil-CL=F$75.44$75.44$88.3317.09%17.09%
Gold-GC=F$1,830.30$1,830.30$1,798.70-1.73%-1.73%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark the performance of specific investments.

Latest Economic Reports

  • Employment: Job growth slowed for the second consecutive month in December with the addition of 199,000 new jobs, well below the 2021 monthly average of 537,000. Employment has increased by 18.8 million since April 2020 but is down by 3.6 million, or 2.3%, from its pre-pandemic level in February 2020. The unemployment rate fell by 0.3 percentage point to 3.9%. The number of unemployed persons fell by 483,000 to 6.3 million. For 2021, the unemployment rate fell 2.8 percentage points and the number of unemployed persons dropped 4.5 million. While both measures are down considerably from their highs at the end of the February-April 2020 recession, they remain above their levels prior to the coronavirus pandemic (3.5% and 5.7 million, respectively, in February 2020). Among the unemployed, the number of workers who permanently lost their jobs declined by 202,000 to 1.7 million in December, although this is 408,000 higher than in February 2020. The labor force participation rate was unchanged at 61.9% in December but remains 1.5 percentage points lower than in February 2020. The employment-population ratio increased by 0.2 percentage point to 59.5% but is 1.7 percentage points below below its February 2020 level. In December, average hourly earnings increased by $0.19 to $31.31. For 2021, average hourly earnings rose by 4.7%. The average work week was unchanged at 34.7 hours in December.
  • There were 260,000 initial claims for unemployment insurance for the week ended January 22. Over the course of 2021, initial weekly claims and total claims for unemployment insurance benefits steadily decreased on a monthly basis, with initial weekly claims hitting a low of 188,000 in early December. As of January 15, 2022, there were 1,675,000 total claims for unemployment benefits. For comparison, there were 4,878,000 total claims for unemployment insurance a year earlier.
  • FOMC/interest rates: The Federal Open Market Committee met in January and agreed to continue to cut its asset purchase programs, bringing them to an end in early March. However, the Committee decided to keep the target range for the federal funds rate at 0.00%-0.25%. Nevertheless, the FOMC noted that with inflation well above 2.0% and a strong labor market, it will soon be appropriate to raise the target range for the federal funds rate.
  • GDP/budget: Gross domestic product rose 6.9% in the fourth quarter of 2021 compared with a 2.3% advance in the third quarter. Consumer spending, as measured by personal consumption expenditures, climbed 3.3% in the fourth quarter (2.0% in the third quarter). The PCE price index, a measure of inflation, increased 6.5% in the fourth quarter after advancing 5.3% in the third quarter. For 2021, the PCE price index rose 3.9% compared with a 1.2% increase in 2020. Gross private domestic investment, which includes nonresidential and residential fixed investment, vaulted 32.0% in the fourth quarter after gaining 12.4% in the third quarter. Nonresidential (business) fixed investment increased 2.0% (1.7% in the third quarter), while residential fixed investment decreased 0.8% (-7.7% in the third quarter). Exports jumped 24.5% in the fourth quarter after falling 5.3% in the prior quarter. Imports climbed 17.7% following a 4.4% rise in the third quarter.
  • December saw the federal budget deficit come in at $21.3 billion, down roughly $122.3 billion from December 2020. The deficit for the first three months of fiscal year 2022, at $377.7 billion, is $195.2 billion lower than the first three months of the previous fiscal year. Compared to the same period last fiscal year, government outlays rose $53.3 billion, while receipts increased $245.5 billion. Through the first three months of fiscal year 2022 compared to the same period last year, individual income taxes are up $188.4 billion, while corporate income taxes have risen $29.8 billion.
  • Inflation/consumer spending: According to the latest Personal Income and Outlays report for December, personal income advanced 0.3% and disposable personal income rose 0.2% after increasing 0.5% and 0.4%, respectively, in November. Consumer spending declined 0.6% in December after increasing 0.4% the previous month. Consumer prices climbed 0.4% in December following a 0.6% gain in November. Consumer prices rose 5.8% since December 2020.
  • The Consumer Price Index climbed 0.5% in December after advancing 0.8% in November. In 2021, the CPI rose 7.0% — the largest 12-month gain since June 1982. Price growth was broad based, with most major categories showing an increase, led by used cars and trucks (3.5%) and apparel (1.7%). Prices for food rose 0.5% in December. Energy prices fell 0.4% in December, pulled lower by a 0.5% dip in gasoline prices and a 2.4% decrease in fuel oil prices. Nevertheless, for 2021, energy prices increased 29.3%, with gasoline prices climbing 49.6% and fuel oil prices rising 41.0%. Also of note in 2021, food prices rose 6.3%, new vehicle prices advanced 10.7%, and prices for used cars and trucks climbed 37.3%.
  • Prices that producers receive for goods and services rose 0.2% in December following a 1.0% November jump. Producer prices increased 9.7% in 2021, the largest advance since data was first calculated in November 2010. Producer prices less foods, energy, and trade services rose 0.4% in December after increasing 0.8% the previous month. In December, prices for services increased 0.5%, while prices for goods fell 0.4%, pulled lower by a 3.35 drop in energy prices. For the year, prices less foods, energy, and trade services moved up 6.9%, the largest rise since 12-month data was first calculated in August 2014.
  • Housing: Sales of existing homes in December fell for the first time following three consecutive monthly gains. Existing home sales dropped 4.6% in December from November’s total. The median existing-home price was $358,000 in December, up from $353,900 in November and 15.8% from December 2020. Unsold inventory of existing homes represents a 1.8-month supply at the current sales pace, a decline from both November (2.1 months) and from one year ago (1.9 months). Sales of existing single-family homes decreased 4.3% in December after increasing 1.6% in November. For 2021, sales of existing single-family homes fell 6.8%. The median existing single-family home price was $364,300 in December, up from $362,600 in November.
  • Unlike sales of existing homes, sales of new single-family homes advanced 11.9% in December after climbing 12.4% in November. The median sales price of new single-family houses sold in December was $377,700 ($416,100 in November). The December average sales price was $457,300 ($479,300 in November). The inventory of new single-family homes for sale in December represented a supply of 6.0 months at the current sales pace, down from the November estimate of 6.6 months. Despite the growth in the number of new homes sold at the end of the year, for 2021, sales of new single-family homes fell 14.0% compared to 2020.
  • Manufacturing: Industrial production declined 0.1% in December. Losses of 0.3% for manufacturing and 1.5% for utilities were mostly offset by a gain of 2.0% for mining. Total industrial production in December was 3.7% higher than it was at the end of 2020 and 0.6% above its pre-pandemic (February 2020) reading. Manufacturing increased 3.5% in 2021, mining rose 11.0%, while utilities decreased 3.4%. Industrial production of some market groups in 2021 was noteworthy, including automotive products (-6.4%), home electronics (+3.1%), foods and tobacco (-0.8%), and clothing (+2.6%).
  • December saw new orders for durable goods decrease 0.9% after increasing 3.2% in November. Excluding transportation, new orders increased 0.4%. Excluding defense, new orders increased 0.1%. Transportation equipment, down three of the last four months, drove the decrease, falling 3.9%. For 2021, new orders for durable goods rose 20.9%.
  • Imports and exports: Both import and export prices declined in December. Import prices fell 0.2% after increasing 0.7% in the prior month. This is the first decrease in monthly import prices since August 2021. Nevertheless, import prices increased 10.4% in 2021, the largest calendar-year rise since import prices advanced 10.6% in 2007. Import fuel prices fell 6.5% in December, the first monthly decline since August 2021 and the largest drop since a 30.9% decrease in April 2020. Despite the December decrease, import fuel prices rose 62.7% in 2021, the largest calendar-year advance since advancing 114.7% in 1999. Excluding fuel prices, import prices rose 0.5% in December and 6.4% for 2021. Export prices declined 1.8% in December after rising 0.8% in November. The December decline was the largest one-month drop since the index fell 3.5% in April 2020. Despite the December decrease, export prices rose 14.7% from December 2020 to December 2021. The 2021 advance was the largest calendar-year increase since the series was first published in 1984.
  • The international trade in goods deficit was $101.0 billion in December, up $2.9 billion, or 3.0%, from November. Exports of goods were $157.3 billion in December, $2.2 billion more than in November. Imports of goods were $258.3 billion in December, $5.1 billion more than in November.
  • The latest information on international trade in goods and services, released January 6, is for November and shows that the goods and services trade deficit rose by $13.0 billion to $80.2 billion from the October deficit. November exports were $224.2 billion, $0.4 billion more than October exports. November imports were $304.4 billion, $13.4 billion more than October imports. Year to date, the goods and services deficit increased $174.6 billion, or 28.6%, from the same period in 2020. Exports increased $354.4 billion, or 18.2%. Imports increased $529.0 billion, or 20.7%.
  • International markets: The Biden administration held discussions with several of the largest banks in the United States on possible sanctions against Russia in efforts to ensure such actions won’t disrupt the global financial system. Tensions remained high after Russia stationed tens of thousands of troops on Ukraine’s border. While the Russian government has repeatedly said it has no intention of invading the country, Western allies are discussing a variety of measures should activity escalate. In addition, several European countries are working to diversify fuel supplies in the event a conflict disrupts shipments of gasoline and diesel from Russia. Elsewhere, Germany’s economy contracted in the fourth quarter of 2021 as its gross domestic product dipped 0.7%. Taiwan’s economy expanded in 2021 at its fastest pace in eleven years. The central banks in several countries raised interest rates in 2021, including the United Kingdom, South Korea, New Zealand, Russia, and South Africa. In the markets for January, the STOXX Europe 600 Index dropped 4.0%; the United Kingdom’s FTSE gained 1.0%; Japan’s Nikkei 225 Index dipped 6.2%; and China’s Shanghai Composite Index declined 7.6%.
  • Consumer confidence: The Conference Board Consumer Confidence Index® declined in January. The index stands at 113.8, down from 115.2 in December. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, improved to 148.2 in January from 144.8 in December. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, declined to 90.8 in January, down from December’s 95.4.

Eye on the Month Ahead

A common adage for the stock market says that as January goes, so goes the year. Hopefully, such is not the case for 2022. The Federal Open Market Committee does not meet in February, giving investors more time to ponder what course to follow with the impending interest-rate hike looming in March.

What I’m Watching This Week – 31 January 2022

The Markets (as of market close January 28, 2022)

A very turbulent week, marked by volatility, ended with a robust finish. Last Friday’s gains were enough to push several of the benchmark indexes higher by the end of the week. The Dow advanced 1.3% and the S&P 500 gained 0.8%. A late-week tech rally was enough to move the Nasdaq back to where it began the week. Crude oil prices advanced for the sixth straight week, with prices reaching a nearly seven-year high. With supplies remaining limited, more projections are pointing to a return to $100.00 per barrel. Ten-year Treasury yields have risen 27 basis points since the beginning of January, while the dollar moved 1.7% higher. Gold prices, which had been gaining ground, fell back last week. Fourth-quarter corporate earnings have been generally favorable, with about 80% of the companies that have reported earnings so far this season beating projections.

Dip buyers and bargain hunters helped push the market indexes generally higher last Monday. After beginning the day well in the red, the Nasdaq was able to climb 0.6%, while the Dow and the S&P 500 each gained 0.3%. The Russell 2000 (-1.8%) and the Global Dow (-1.2%) failed to gain ground. Ten-year Treasury yields and crude oil prices declined, while the dollar gained a quarter of a percent. Most of the market sectors ended the day higher, led by consumer discretionary, which advanced 1.3%. Utilities, health care, and consumer staples ended the day lower.

Stocks were unable to maintain any momentum from the prior day, as each of the benchmark indexes fell last Tuesday. The Nasdaq led the downturn, dipping 2.3%, followed by the Russell 2000 (-1.4%), the S&P 500 (-1.2%), and the Dow (-0.2%). The Global Dow inched 0.2% higher. Investors apparently remained edgy as they awaited the Wednesday statement following the Federal Reserve’s meeting. Corporate earnings data for the fourth quarter of 2021 has not been quite as robust compared to the third quarter, although several major companies posted returns that beat projections. Ten-year Treasuries rose five basis points to close at 1.78%. Crude oil prices climbed 2.3% to $85.23 per barrel. The dollar was little changed on the day.

Last Wednesday, Wall Street reacted to the expected Federal Reserve announcement (see below) with mixed results. The Dow slid 0.4%, the Russell 2000 fell 1.3%, and the S&P 500 dipped 0.2%. The Nasdaq closed relatively unchanged. Among the market sectors, only financials and information technology gained ground, while materials and real estate each fell more than 1.0%. Ten-year Treasury yields added more than seven basis points to close at 1.85%. The dollar and crude oil prices also advanced on the day.

Despite last Thursday’s upbeat fourth-quarter gross domestic product (see below), stocks couldn’t hold on to gains from earlier in the day, ultimately closing in the red. The Russell 2000 continued to dive lower, ending the day down 2.3%, followed by the Nasdaq (-1.4%), the Global Dow (-0.6%), and the S&P 500 (-0.5%). The Dow was flat by the end of Thursday’s trading. Ten-year Treasury yields dipped 4 basis points, crude oil prices slid minimally, while the dollar advanced 0.9%.

Stocks roared back last Friday with the best day since June 2020. Strong fourth-quarter earnings reports from some major corporations may have lured dip buyers, at least for the day. The Nasdaq jumped 3.1%, followed by the S&P 500 (2.4%), the Russell 2000 (1.9%), the Dow (1.7%), and the Global Dow (0.5%). Gains in the market sectors were widespread, with only energy losing ground. Information technology jumped 4.3%, real estate gained 3.4%, and communication services advanced 2.9%. Crude oil prices climbed to $87.23 per barrel. Ten-year Treasuries and the dollar fell.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 1/28Weekly ChangeYTD Change
DJIA36,338.3034,265.3734,725.471.34%-4.44%
Nasdaq15,644.9713,768.9213,770.570.01%-11.98%
S&P 5004,766.184,397.944,431.850.77%-7.01%
Russell 20002,245.311,987.921,968.51-0.98%-12.33%
Global Dow4,137.634,145.334,113.38-0.77%-0.59%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries1.51%1.74%1.78%4 bps27 bps
US Dollar-DXY95.6495.6497.231.66%1.66%
Crude Oil-CL=F$75.44$84.76$87.232.91%15.63%
Gold-GC=F$1,830.30$1,831.60$1,790.40-2.25%-2.18%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • No surprises followed last week’s Federal Open Market Committee meeting. The Committee noted that while indicators of economic activity and employment have continued to strengthen, supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation. The FOMC decided to keep the target range for the federal funds rate at 0.00%-0.25%. However, with inflation well above 2.0% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate. Also, the Committee decided to continue reducing the monthly pace of its net asset purchases, bringing them to an end in early March. It is presumed that the first interest rate hike would occur following the FOMC’s March 16 meeting.
  • The economy accelerated at an annual rate of 6.9% in the fourth quarter of 2021, according to the initial, or advance, estimate of gross domestic product. GDP advanced 2.3% in the third quarter. The increase in GDP primarily reflected increases in private inventory investment, exports, personal consumption expenditures (PCE), and nonresidential fixed investment that were partly offset by decreases in both federal, state, and local government spending. Imports, which are a subtraction in the calculation of GDP, increased. Personal consumption expenditures advanced 3.3% in the fourth quarter compared with a 2.0% increase in the third quarter. The price index for gross domestic purchases rose 6.9% in the fourth quarter, compared with a 5.6% gain in the third quarter. The personal consumption expenditures price index increased 6.5% in the fourth quarter, compared with a third-quarter increase of 5.3%. Excluding food and energy prices, the PCE price index increased 4.9% in the fourth quarter compared with an increase of 4.6% in the third quarter. The PCE price index increased 3.9% in 2021, compared with an increase of 1.2% in 2020.
  • Inflationary pressures continued in December, according to the latest data from the Bureau of Economic Analysis. The personal consumption expenditures price index, a measure of inflation, rose 0.4% last month after climbing 0.6% in November. For the year, the PCE price index rose 5.8%. Energy prices increased 29.9% while food prices increased 5.7%. Excluding food and energy, the PCE price index increased 4.9% in 2021. Personal income climbed 0.3% in December and disposable (after-tax) personal income advanced 0.2%. The increase in personal income in December primarily reflected an increase in compensation that was partly offset by a decrease in proprietors’ income. Within compensation, the increase reflected increases in both private and government wages and salaries. Personal consumption expenditures, a measure of consumer spending, fell 0.6% in December, reflecting a decrease in spending for goods (-2.6%). Within goods, decreases were widespread across most components and were led by declines in spending on recreational goods and vehicles, “other” nondurable goods (which includes newspapers, household supplies, and games and toys), and furnishings and durable household equipment.
  • New orders for durable goods declined for the first time in three months, falling 0.9% in December. Driving the decrease last month was a 3.9% dip in transportation equipment, a 14.4% decrease in nondefense aircraft and parts, and an 11.2% drop in defense aircraft and parts. Despite the December decrease, new orders for durable goods rose 20.9% in 2021.
  • The advance report in international trade in goods saw the December trade deficit come in at $101.0 billion, up $2.9 billion from November. Exports of goods for December were $157.3 billion, $2.2 billion more than November exports. Imports of goods for December were $258.3 billion, $5.1 billion more than November imports.
  • According to the Census Bureau, new home sales jumped 11.9% in December above the prior month’s total. However, sales of new single-family homes decreased 14.0% in 2021 compared to 2020. The median sales price of new houses sold in December 2021 was $377,700. The average sales price was $457,300. Inventory of new homes for sale sat at a supply of 6.0 months at the current sales rate.
  • The national average retail price for regular gasoline was $3.323 per gallon on January 24, $0.017 per gallon more than the prior week’s price and $0.931 higher than a year ago. The Gulf Coast price increased more than $0.05 to $3.01 per gallon, the Midwest price increased nearly $0.02 to $3.13 per gallon, and the East Coast price increased more than $0.01 to $3.25 per gallon. The West Coast price decreased nearly $0.01, remaining virtually unchanged at $4.16 per gallon, and the Rocky Mountain price decreased less than $0.01, remaining virtually unchanged at $3.33 per gallon. As of January 24, residential heating oil prices averaged nearly $3.67 per gallon, almost $0.07 per gallon above last week’s price and nearly $1.10 per gallon higher than last year’s price at this time. Residential propane prices averaged nearly $2.75 per gallon, more than $0.02 per gallon above last week’s price and more than $0.55 per gallon above last year’s price.
  • For the week ended January 22, there were 260,000 new claims for unemployment insurance, a decrease of 30,000 from the previous week’s level, which was revised up by 4,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 15 was 1.2%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 15 was 1,675,000, an increase of 51,000 from the prior week’s level, which was revised down by 11,000. States and territories with the highest insured unemployment rates for the week ended January 8 were Alaska (3.1%), New Jersey (2.7%), California (2.6%), Minnesota (2.6%), Illinois (2.5%), Rhode Island (2.5%), New York (2.4%), Kentucky (2.3%), Massachusetts (2.3%), Connecticut (2.1%), and Puerto Rico (2.1%). The largest increases in initial claims for the week ended January 15 were in California (+805), Kentucky (+527), Puerto Rico (+473), Rhode Island (+464), and Virginia (+406), while the largest decreases were in New York (-13,854), Missouri (-7,098), Washington (-6,016), Michigan (-5,555), and Texas (-4,773).

Eye on the Week Ahead The latest data on the employment sector is available this week with the release of the Job Openings and Labor Turnover Survey and the employment situation summary. Job openings have been falling, but the number of quits has continued to increase. On the employment side, December saw 199,000 new jobs added, the unemployment rate dipped, and average hourly earnings rose by 0.6%.

What I’m Watching This Week – 24 January 2022

The Markets (as of market close January 21, 2022)

Volatility has engulfed the markets this month and is showing no signs of letting up, impacted by a more hawkish Federal Reserve stance, economic disruptions from Omicron, and risks to company profits due to rising costs. Fourth-quarter 2021 corporate earnings season has begun with uneven results so far. Inflation continues to hover over investors as they anticipate a bump in interest rates for the first time in three years, with the first increase likely coming in March. Demand for 10-year Treasuries has driven prices higher, sending yields lower for the first time in five weeks. With last week’s losses, both the Nasdaq and the Russell 2000 have declined nearly 12.0% in January. The Nasdaq is in correction territory, down over 10.0% from its November peak, hitting its lowest level since June 2021.

Wall Street continued its January swoon last Tuesday, falling lower to start the holiday-shortened trading week. The Nasdaq dropped 2.6%, recording its lowest close since October. The Russell 2000 fell 3.1%, the S&P 500 dipped 1.8%, the Dow declined 1.5%, and the Global Dow lost 1.1%. Investors continued to weigh the anticipated interest-rate hikes by the Federal Reserve, which meets this week. Ten-year Treasury yields jumped nine basis points to 1.86%. The dollar gained 0.5%. Crude oil prices rose to $85.89 per barrel. Among the market sectors, energy was the only gainer. Information technology (-2.5%), financials (-2.3%), and communication services (-2.0%) fell the most.

The slide continued for stocks last Wednesday. Each of the benchmark indexes listed here lost value. The Nasdaq extended losses, dropping more than 10.0% from a November high, falling into correction territory. The small caps of the Russell 2000 declined 1.5%, followed by the Nasdaq (-1.2%), the Dow and the S&P 500 (-1.0%), and the Global Dow (-0.8%). Ten-year Treasury yields dipped, despite projections that yields will cross the 2.0% threshold, possibly within the first six months of the year. The dollar also slipped lower. Crude oil prices continued to climb, reaching $86.50 per barrel. Consumer staples and utilities were the only market sectors to gain ground. Consumer discretionary and financials each fell 1.7%.

Higher-than-expected jobless claims didn’t help investor confidence, as equities dipped lower again last Thursday. Dip buyers sent stocks higher earlier in the day, but the rally did not last as each of the benchmark indexes listed here gave back any gains to close in the red. The Russell 2000 (-1.9%) led the declines, followed by the Nasdaq (-1.3%), the S&P 500 (-1.1%), the Dow (-0.9%), and the Global Dow (-0.3%). Crude oil prices moved slightly lower on Thursday, down 0.7% to around $86.29 per barrel. Ten-year Treasury yields and the dollar crept higher.

Stocks fell again last Friday, with tech shares leading the sell-off following shaky corporate earnings data. The S&P 500, which slid 1.9%, closed below its 200-day moving average for the first time since 2020. The Nasdaq dropped 2.7% and the Russell 2000 lost 1.8%. The Dow (-1.3%) and the Global Dow (-1.6%) also ended the day in the red. Ten-year Treasury yields, the dollar, and crude oil prices also declined to end the week.

Stock Market Indexes

Market/Index2021 ClosePrior WeekAs of 1/21Weekly ChangeYTD Change
DJIA36,338.3035,911.8134,265.37-4.58%-5.70%
Nasdaq15,644.9714,893.7513,768.92-7.55%-11.99%
S&P 5004,766.184,662.854,397.94-5.68%-7.73%
Russell 20002,245.312,162.461,987.92-8.07%-11.46%
Global Dow4,137.634,293.854,145.33-3.46%0.19%
Fed. Funds target rate0.00%-0.25%0.00%-0.25%0.00%-0.25%0 bps0 bps
10-year Treasuries1.51%1.77%1.74%-3 bps23 bps
US Dollar-DXY95.6495.1795.640.49%0.00%
Crude Oil-CL=F$75.44$84.23$84.760.63%12.35%
Gold-GC=F$1,830.30$1,816.50$1,831.600.83%0.07%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

  • According to the latest data from the Census Bureau, the number of building permits issued in December for privately owned housing units rose by 9.1% over the November estimate. Permits issued for single-family construction increased 2.0% in December. Overall, the number of building permits issued in 2021 was 17.2% above the 2020 figure. Housing starts also increased in December, climbing 1.4% higher than the November rate. Single-family housing starts in December were 2.3% below the November figure. Housing starts increased 15.6% in 2021 compared to the previous year. Housing completions dipped in December, falling 8.7% below the November total. However, single-family home completions increased 3.9% in December. For 2021, housing completions increased 4.0% compared to 2020.
  • Sales of existing homes broke a three-month series of gains, falling 4.6% in December. Year over year, existing home sales dipped 7.1%. According to the National Association of Realtors®, the December pullback was more attributable to supply constraints than weakened demand for housing. However, existing home sales may continue to slow in the coming months due to anticipated higher mortgage rates. Unsold inventory sits at a 1.8-month supply at the current sales pace, down from November’s 2.1-month supply. The median existing home price for all housing types was $358,000 in December, up 1.2% from the November price of $353,900 and 15.8% above the December 2020 figure ($309,200). Sales of existing single-family homes also fell in December, down 4.3% from November’s total and off 6.8% from a year ago. The median existing single-family home price in December was $364,300, 0.5% above the November price ($362,600) and 16.1% higher than the December 2020 price.
  • The national average retail price for regular gasoline was $3.306 per gallon on January 17, $0.011 per gallon more than the prior week’s price and $0.927 higher than a year ago. The Gulf Coast price increased nearly $0.04 to $2.96 per gallon, the East Coast price increased more than $0.01 to $3.24 per gallon, and the West Coast price increased less than $0.01, remaining virtually unchanged at $4.16 per gallon. The Rocky Mountain price decreased nearly $0.02 to $3.33 per gallon, and the Midwest price decreased less than $0.01, remaining virtually unchanged at $3.11 per gallon. As of January 17, residential heating oil prices averaged almost $3.61 per gallon, nearly $0.15 per gallon above last week’s price and $1.05 per gallon higher than last year’s price at this time. Residential propane prices averaged nearly $2.73 per gallon, more than $0.02 per gallon above last week’s price and more than $0.54 per gallon above last year’s price.
  • For the week ended January 15, there were 286,000 new claims for unemployment insurance, an increase of 55,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended January 8 was 1.2%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended January 8 was 1,635,000, an increase of 84,000 from the prior week’s level, which was revised down by 8,000. States and territories with the highest insured unemployment rates for the week ended January 1, were Alaska (3.1%), Minnesota (2.8%), Kentucky (2.7%), New Jersey (2.6%), New York (2.6%), Rhode Island (2.5%), California (2.4%), Connecticut (2.4%), Massachusetts (2.3%), and Oregon (2.3%). The largest increases in initial claims for the week ended January 8 were in California (+11,295), New York (+10,639), Texas (+10,437), Kentucky (+8,476), and Missouri (+7,768), while the largest decreases were in Massachusetts (-2,079), Connecticut (-1,437), Michigan (-1,158), New Hampshire (-424), and Rhode Island (-424).

Eye on the Week Ahead

There’s plenty of economic news to watch for this week. The first estimate of the fourth-quarter 2021 gross domestic product is out. The economy advanced at an annualized rate of 2.3% in the third quarter, well off the 6.7% growth rate in the second quarter. The December figures on personal income and spending are available this week. Personal income rose 0.4% in November, consumer spending advanced 0.6%, while prices for consumer goods and services climbed 0.6% for the month and 5.7% since November 2020. Aside from these important economic reports, all eyes will be focused on the Federal Reserve, which meets this week. It is expected that the Fed will continue to address rising inflation by further reducing stimulus and projecting interest-rate increases beginning this March.