MARY REICHARD, HOST: Coming next on The World and Everything in It, the Monday Moneybeat.
NICK EICHER, HOST: The American economy is still going great guns. The global economy, not so much. More about that in a moment.
Government reports in November: Industrial production, up. Government deficit, up. Retail sales, up.
American consumers year-to-date have pushed up retail purchases 5.3 percent. That’s driven by historically low unemployment and rising wages. November’s month over month number was a weak two-tenths of a percent, due largely to the lower price of gasoline at the pump. You factor that out, and otherwise retail sales moved along at a very healthy half-a-percentage point clip.
American industry in November is up 3.9 percent year over year. Month over month, it rose six-tenths of a percent after falling in October. The two big drivers were mining and utilities. Manufacturing was flat.
The government budget deficit was terrible. It set a dubious record high for November: $205 billion for the month. That’s $66 billion higher than last November. The U.S. Department of the Treasury notes two-thirds of that rise in November was due to an early payout of December entitlement benefits. The first of the month fell on a Saturday, so the December payments actually hit the books in November.
One more note on the deficit: You hear lots of media reports blaming the tax cut. That’s just wrong. Tax collections for the first two months of Fiscal Year 2019 are up 3.6 percent over the same period last year. Spending is up more than 18 percent. Spending is the culprit.
REICHARD: The global economy is the culprit for a stock market plunge to end the week on Friday. All the major stock indexes hit eight-month lows: That’s the Nasdaq, the Standard & Poor’s 500, and the Dow Jones Industrial Average. All three of those are sitting 10 percent below their recent high and that means all three are in a market correction. That’s the first time that’s happened since March of 2016.
The Dow lost 1.2 percent for the week and finished 10 percent below its recent peak in October. The S&P 500 shed 1.3 percent and that puts the index 11 percent below its September peak. And the Nasdaq is sitting 15 percent off the high it reached in August, after it gave up 2.3 percent for the week.
EICHER: Analysts blame two things: Global economic weakness, first in China, which is really feeling the effects of U.S. tariffs. And second in Europe: Germany hasn’t quite climbed out of its October contraction, France is beset by protests over fuel taxes, and Britain is impossible to read, with Brexit the major wild card. There’s fear that the U.S. economy is due for a pullback and the global problems may spill over into this country. All that uncertainty is producing market volatility and traders have been selling on Fridays in anticipation of bad news while the market’s closed over the weekend.
One piece of highly anticipated news is the Wednesday meeting of the Federal Reserve. Will the Fed raise interest rates and if so will it signal anything about rate hikes in 2019? Some market analysts worry too-high interest rates will stall economic growth.
And that’s today’s Monday Moneybeat.