Photo Credit: Andreas Klinke Johannsen, Flickr.
It’s the first Friday of spring, but the skies are cloudy (both literally and figuratively here in Minnesota), rather than full of seasonally appropriate sunshine. Everybody’s got their eyes on Russia-Ukraine as the global powers determine their next moves. Financial markets wobbled, and the Dow Jones Industrial Average showed increased volatility with a large dip on Monday, followed by an equally positive surge on Tuesday.
Global trouble aside, the fundamentals of the U.S. economy remain strong with better-than-expected job growth, upbeat news from the latest Beige Book report, and weekly unemployment claims declining from the previous week signaling general confidence on the part of employers.
Let’s get into it.
This week’s most significant financial news is a relief: the latest job creation numbers from the Bureau of Labor Statistics beat expectations. In total, 175,000 new jobs were added to the American economy, higher than the 140,000 predicted. This month’s data includes 25,000 in previous revisions for the previous, seriously disappointing months.
The number of workers in part-time jobs for involuntary reasons has declined to a level not seen since 2008, the number of workers unemployed for 27 weeks or more has fallen sharply (still too high), the lack of state and local government hiring remains a drag and current trends indicate employment will reach pre-recession levels during the summer.
The Federal Reserve’s Beige Book reports data from the 12 Federal Reserve Districts to provide a nuanced look at economic conditions across the country. The latest report showed economic activity improving modestly to moderately in eight of the districts, with declines in the New York and Philadelphia areas — possibly related to the extreme winter weather. Growth also slowed in the Chicago and Kansas City metro areas.
Residential activity was generally mixed, with many districts reporting improved conditions but slower rates of growth. New home construction increased in Richmond, Atlanta, Chicago, St. Louis and Minneapolis.
Commercial real estate activity strengthened in New York, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City and San Francisco, which is an excellent indicator of current and future economic expansion.
Geopolitical turmoil can throw a major wrench into the spokes of the global economy, and the recent Russian incursion into Ukraine has certainly put investors on edge as they imagine the possible repercussions to follow.
Russia is one of the 10 largest economies, and a major energy supplier throughout Asia and Europe. Whatever happens here will ricochet around the world, and its stock market and currency have been plunging since this crisis began.
We’ll be keeping our eyes on this one, as will the rest of the world.