Catalyst Strategic Solutions' website

Savings are Soaring...
for Now

Learning Opportunities

For the second month in a row, incomes outpaced spending. Personal incomes rose 0.4 percent, and spending increased 0.2 percent in February, a mirror image of activity in January. The wage component of income was up 0.5 percent, suggesting the gain in incomes could be sustained throughout the year. The savings rate jumped to 3.4 percent, the highest since August 2017. Consumers likely will begin to spend in coming months, fueled by tax returns, tax cuts and overall confidence in the economy. The University of Michigan Consumer Sentiment Index rose to 101.4 percent in March, the highest level in 14 years.

Other Key Indicators this Week:

Housing – The national gauge of home prices increased 6.2 percent in January from a year ago. This was slightly below the 6.3 percent pace in December, but remains close to the highest level since June 2014. Prices rose 6.4 percent for the 20 largest metropolitan areas. Seattle posted the largest gain, up 12.9 percent. In related news, the number of contracts signed to purchase previously owned homes increased 3.1 percent in February. This was the first increase in three months. While sales are beginning to improve, rising interest rates are adding tension to a market already short on inventory. Current home owners are reluctant to move and give up their low borrowing rate.

GDP – It's 'third time's a charm' when it comes to calculating economic growth. The U.S. economy grew 2.9 percent in the fourth quarter of 2017, versus the original estimates of 2.6 percent. The bulk of the increase came from stronger consumer spending and business investment. Spending increased 4.0 percent, the best pace in three years. Nonresidential fixed investment, which includes spending on buildings and equipment, increased 0.2 percent to 6.8 percent. Overall growth in 2017 was 2.6 percent, the best performance since 2014.

Trade Deficit – The trade deficit widened 0.1 percent to $75.4 billion in February. This is the largest deficit since July 2008. Exports increased by $2.98 billion, and imports were up $3 billion.

Strategically for Credit Unions:

What a week, and what a month! The stock market was a roller coaster this month, posting some of the largest losses and gain in years. A day after the three major stock indices had their worst week since 2016, the Dow came back with the largest one-day gain since October 2008. The non-stop volatility in stocks created a stable safe haven in the Treasury market. The 10-year note traded in a narrow 10 basis point range in March until the last day of the month. Unable to break through the 2.90 percent resistance level, the bellwether note cracked the 2.80 percent floor the last trading days of the month. The note closed at 2.74 percent, the lowest level in two months. Despite the Federal Reserve talking about raising rates more this year, the bond market is not convinced there is enough growth or inflation to move long-term rates higher.

Sarina Freedland – Senior Investment Officer

Although this information has been obtained from sources we believe to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. This is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. All herein listed securities are subject to availability and change in price. Past performance is not indicative of future results. Changes in any assumption may have a material effect on projected results.