By: Mark Schieffer, CFA
EVP Chief Investment Officer
The September employment figures were not great, despite the improvement in the unemployment rate. Non-farm payrolls grew by just 114 thousand and manufacturing jobs fell by 16 thousand. The unemployment rate fell below 8% (7.8%) for the first time since January 2009, largely on increases in part-time jobs. Global growth and trade activity appears to be falling noticeably; U.S. exports fell sharply in August. Q3 growth in the U.S. economy is expected to come in sub-2%.
We are now just a few weeks away from U.S. national elections and the expectations are getting tighter. The fiscal cliff situation (tax cuts expiring, spending cuts looming) is taking up more media attention for its potential negative impact in 2013 and beyond. As our daily market expert, Jeff Smith, points out, the U.S. consumer is feeling more confident in the short term, saving less and spending more. Consumer confidence is rising, housing is improving and retail sales rose notably (1.1%, .9% ex-autos and gasoline) in September. Auto sales hit 14.9mm units in September, the largest figures in 4.5 years. The hangover that is due from higher scheduled tax withholding in January will likely prove to be a rude awakening. Business spending is largely ahead of this notion—it’s been slowing for awhile now. U.S. stock prices are down 1-3% in the last month, fully offsetting last month’s gains.