2015 year end economic report with January 8, 2016 update
U.S. Employers add 2.65 million new jobs in 2015 - The Labor Department reported that employers added 292,000 new jobs in December. This beat expectations of 200,000. The unemployment rate held steady at 5%, a 7 1/2 year low, as more workers entered the workforce. The unemployment rate at the end of 2014 was 5.6% down from 6.7% at the end of 2013. U.S. Unemployment peaked in October 2010 at 10%. For the last quarter of 2015 the average monthly job growth was 284,000 new jobsa month for the 3 month period. The U.S. economy added 2.65 million jobs to payrolls in 2015 and 3.1 million jobs in 2014, the two best years for U.S. employment growth since 1999. The only sector that lost jobs for the year was oil, gas, and mining which lost 129,000 jobs in 2015 as low oil prices have caused U.S. Companies to cut oil production.The report revealed that while job growth has been quite robust wage growth has disappointed analysts. Average hourly earnings, fell slightly in December to $25.24, although wages grew 2.5 percent between January and December. Usually, when the unemployment rate hits these low levels wages rise. Stocks end the year mostly unchanged from 2014 - Despite robust job growth, record auto sales, strong retail sales stocks were mixed for the year. We begin 2016 with the same issues that hurt stocks in 2015. Those were the drop in oil prices which caused energy stocks to tumble throughout the year, and the strong dollar, which hurt exports, and manufacturing, by making goods made by American companies more expensive overseas. Stocks in these sectors were impacted. The Dow Jones Industrial Average closed the year at 17,425.03, down from 2014’s close of 17,823.07. This was the DOW's first annual loss since the stock market crashed in 2008.The S&P 500 closed the year at 2,043.94, about the same as 2014's close of 2,058.90. The NASDAQ closed at 5,007.41, up from last year’s close of 4,736.05 The tech-dominated Nasdaq index rose 5.7% for the year, the only winner in 2015!January 8, week end - Stocks have worst week since 2011 - DOW drops 1,000 points - DOW and S&P down 6% for the week- Chinese stock markets collapsed this week. Their markets were shut down twice after drops so 7% each. The government stepped in an assured investors they would not push to devalue their currency further, and, depending on the report you read, may have purchased stocks to stem the fall. By the end of the week the Shanghai Composite Index fell more than 10%. Markets around the world followed, including ours. On Friday the U.S. jobs report which showed that the U.S. Economy appears to be still expanding stabilized markets here and in Europe. ( although our markets sold off late in the day and closed down) Asia markets had already closed for the night before the report was released. Oil dropped further hitting as low as $32 a barrel on reports of a world wide oversupply. This was over a 10% drop for the week. This also hurt the markets, especially energy stocks. The dollar strengthened further. It rose all week and rose .04% on Friday alone after the strong jobs report. This and further slowing in China hurt stocks of companies which sell goods to China. The Dow closed January 8, 2016 at 16,346.45, down sharply from 17,425.03 the previous week. The S&P 500 closed the week at 1,922.03, down from 2043.94 the previous week. The NASDAQ closed Friday at 4,643.63, also sharply down from 5,007.41 the previous week.
Oil prices continue to tumble - Crude oil ended 2015 at $37.04 a barrel down from $60.48 at the close of 2014, a 38% decrease. The lowest since the depths of the recession in 2009. Oil prices were at $101 a barrel in June of 2014. Many parts of the country have gas prices under $2.00 per gallon. California is about $2.60 per gallon, due mostly to higher taxes, and closures at California refineries. The energy sector closed out the year down nearly 24%, making it the worst performer in the S&P 500.
January 8, 2016 - Oil prices fall further Oil hit lows of $32 per barrel this week. Down over 10% this week.
Strong dollar hurts U.S. Companies - The dollar strengthened against nearly all other currencies which made U.S. goods more expensive overseas, and foreign goods less expensive at home. This hurt manufacturing as U.S. Companies cut back on products intended to be experts abroad.
U.S. auto sales highest ever in 2015 - Americans bought more due to solid December gains by the biggest automakers.
Treasury Bond yields increase in 2015 – The 10-year Treasury bond closed the year at 2.27% up from 2.17% at the close of 2014. The 30-year treasury yield was 3.01% on Dec. 31, up from 2.75% last December 31!
January 8, 2016 - Bond yields fall this week - As stocks tumbled investors bought treasury bonds looking for safety. The 10 year U.S. Treasury bond yield closed Friday at 2.13%, down from 2.27% last week. The 30 year U.S. Treasury bond yield closed Friday at 2.91%, also down from 3.01% last week, Dec. 31. These were the lowest levels since October.
U.S. Existing home sales lowest in 19 months to close the year - New disclosure regulations cause delays - The National Association of Realtors reported that the number of existing homes sold in November dropped 10.5% from October. Much of the drop in closings occurred due to the new "know before you owe" TRID disclosure regulations that apply to all loans applications taken after October 3, 2015.
Mortgage Rates – The Freddie Mac Primary Mortgage Survey reported that: The 30 year fixed mortgage rate average for the end of the year was 4.01%, a jump from 2014 close at 3.73%. The 15 year fixed was 3.24%, also up from last year’s close of 3.05%. The 5-year ARM was 3.08%, up from 2.98, at end of 2014. The 1 yearARM was 2.68%, and was 2.39% last December 31.Jumbo rates for loans over $419,000 are 1/8% to ¼% higher than the rates above.
January 8, 2016 -Mortgage rates fall this week - The 30 year fixed rates below loan amounts of 419,000 fell to 3.875%. 30 year rates for loans above 419,000 are just above 4%. The 15 year fixed was around 3.10%. The 5 year was around 3%.