The Stock Market Has Risen But Economic Uncertainty Still Prevails

Retail Sales - "Reading Between The Lines"

Update for the week ending June 12th

The major stock market averages recorded slight gains last week with the S&P 500 Index rising 0.6% through Friday, June 12^th.  The price of oil continued to rise last week reaching an 8^th month high of $73 per barrel.  Gas prices followed suit rising for the 45^th consecutive day on Friday, the longest stretch dating back to the 1970s.  The stock market decline and the continued deterioration in home values resulted in U.S. household net worth falling to $50.4 trillion in the first quarter of the year, a decline of $1.33 trillion from the fourth quarter of last year, and the lowest net worth figure since 2004.  The Government’s attempt to battle the recession and bailout the financial and auto industries resulted in a budget deficit totaling nearly $1.0 trillion through May, with 4 months remaining in this budget year.  In response to growing concern with the ballooning federal budget deficit, investors gave a cool reception to the ten-year treasury auction last week causing yields to rise to nearly 4%.  Higher ten-year yields result in increased borrowing costs for consumers.  The thirty-year auction the following day was received more favorably, illustrating the “see-saw” mentality that prevails as investors react to the various economic indicators throughout the week.

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