Markets, Economy

Weekly Kickstart (08/07/2017-08/11/2017)

8/7/17 8:00 AM

/iStock-501199714.jpgThe market melt-up resumed last week, as the S&P 500 increased by 0.19 percent to 2,476.83. That solid start to the month of August left the benchmark index up 10.63 percent year-to-date, and just 0.04 percent below the all-time closing high. As for performance during the month of July, the S&P 500 rose 1.93 percent, the best gain since February and the 8th increase in the past nine months. Most participants in tax-advantaged 401(k) plans fared even better in July, according to new data from the Employee Benefit Research Institute (EBRI). For example, the average 401(k) account balance for younger (25-34), less tenured (1-4 years) workers rose by 3.00 percent last month, while older workers (55-64) with more than 20 years of tenure saw their 401(k) balances rise by an average of 1.70 percent.


Even more impressive is that since the start of 2015, the average 401(k) account balance for younger, less-tenured workers has surged by 132.90 percent, while the S&P 500 has gained just 19.98 percent (through the end of July 2017). Older, more-tenured workers saw their 401(k) balances rise by an average of “only” 26.4 percent during this same period, not surprising since these individuals tend to have much larger accounts that are less sensitive to both contribution size and market fluctuations. More importantly, these substantial gains should provide further evidence of how effective consistent participation in a tax-advantaged savings vehicle can be when trying to amass a significant retirement nest egg. Additional assistance is available through the use of dollar-cost averaging and regularly consulting with a professional financial advisor. As always, we are here to help with any questions you may have.


To recap a few of the things we learned about the economy last week, the positives included that the nation’s trade deficit narrowed, pending home sales increased, gauges of manufacturing activity improved, factory orders rose, household inflation pressures moderated, corporate layoff announcements fell to the lowest level of 2017, initial jobless claims declined, average hourly earnings grew at a faster pace, Americans’ confidence in the labor market firmed, small business job creation rebounded, monthly nonfarm payrolls growth remained above 200K, and the unemployment rate slid to a 16-year low. As for the negatives, mortgage and refinance applications decreased, construction investment fell, consumer spending growth remained sluggish, and gauges of services sector activity moderated. This week the pace of economic data slows down but there are still several important reports on inflation, consumer credit, employment, and productivity scheduled to be released, along with the latest reading on small business owner optimism from the National Federation of Independent Business (NFIB) due out tomorrow morning.


**A more detailed snapshot of the U.S. economy can be found here.**

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Sources: Econoday, EBRI, FRBSL

Post author: Charles Couch