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Economic Update

September 2, 2014

Economic themes: GDP, Manufacturing, Personal Income & Outlays, Housing.

  • GDP: Gross Domestic Product grew at 4.2% in the second quarter, above forecasts of a 4% increase, as the economy rebounded from a weak first quarter that was held back by adverse weather conditions.  The GDP price index increased by 2.1%, slightly above forecasts of 2%.  The economy continues to improve at a gradual pace.
  • Manufacturing: The ISM Manufacturing Index posted a 59 reading in August, well above forecasts of a 56.8 reading, led by strength in the new orders and production components.  The figure gives the Fed more room to ease monetary policy.
  • Personal Income & Outlays: Personal income increased by 0.2% in July, below a forecasted 0.3% increase; and personal spending fell by 0.1% in July, compared to a forecasted 0.2% increase.  The Personal Consumption Expenditures (PCE) price index increased 0.1%, and is up 1.6% over the past year, still below the Fed’s preferred gauge of 2%.
  • Housing: The S&P Case-Shiller Index fell by 0.2% in June and is up 8.1% over the past year.  Weakness was seen in the Minneapolis, Detroit, Atlanta, and Chicago regions.  Price declines are generally favorable for home sales; though hurt consumers’ balance sheets.  Pending home sales increased by 3.3% to a 105.9 reading in July, led by gains in the northeast, as the job market is improving, mortgages remain low and supply is increasing.
  • Economic highlights for the week ahead:

o    Thursday, 9/04/2014: International Trade, Jobless Claims.

o    Friday, 9/05/2014: Employment Report.

Municipal market themes: Napa

  • Napa: Both Moody’s and S&P stated that credits throughout Napa County will not have an immediate adverse impact from the 6.0 magnitude earthquake.  The city-owned water and sewer system was somewhat damaged by the quake, though repairs appear to be manageable.  The enterprise is supported by 662 days cash on hand as of 6/30/2013.


This report is prepared for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or service.  Market prices and other data may be obtained from outside sources and is not warranted as to completeness or accuracy. Any comments, statements and/or recommendations made herein are subject to change without notice, and may not necessarily reflect those of Alamo Capital.  Past performance does not guarantee future results.  Alamo Capital has no affiliation with any political party. Investing involves risk. Consult with a Financial Professional for additional information to determine the suitability of this or any other financial product or issue as it relates to your particular situation.

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