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Economic Review: Tax Cuts, Spending Bill, and Sector Performance

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Explore the latest updates on tax cuts, spending bill provisions, sector performance, and upcoming economic indicators. Stay informed on financial trends and market insights.

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Economic Review: Tax Cuts, Spending Bill, and Sector Performance

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  1. Nothing has ‘Changed’

  2. Tax Cuts in the bill • Include a $400 payroll tax cut for individuals making less than $75,000, and couples less than $150,000 (this is likely to be spread out evenly throughout the year, not in a lump sum) • A tax credit for first time home buyers ($8,000) • Tax deductions for some new investments

  3. Spending in the bill • The spending provisions include new funds for alternative energy projects (including modernizing the grid) • New funds for road and bridge infrastructure ( a good article in the WSJ today about this) • Assistance to the states for education and Medicaid • Funds to extend unemployment benefits to December 2009.

  4. Good news • The Commerce Department reported that retail sales rose 1% in January (on a seasonally adjusted basis). • Retail sales for November and December were adjusted to -2.4% and -3.0% respectively

  5. Best and Worst Sectors • The Health Care and Technology sectors (-2.06% and -3.12% respectively for the week) were the best-performing • Financials sector (-9.14% for the week) was the worst-performing sector for the week.

  6. Why is this happening? • The “bad bank” proposal by the Treasury Department has a serious weakness in setting the price for the “toxic” assets it will buy • Most economists believe that more US banks will fail in the coming months

  7. Monetary Base • QInsight also notes that the adjusted real monetary base is up over 84% on a year over year basis in mid-December 2008.

  8. Phase: Plunge • Sectors that traditionally do well in the late Plunge: • The Financial, Financial Services, Basic Materials, Consumer Discretionary and Consumer Staples

  9. Initial Jobless Claims

  10. Continuing Jobless Claims

  11. Consumer Confidence Sentiment

  12. Upcoming Economic Indicators • 2/19 – PPI • 2/19 – Initial Jobless Claims • 2/19 – Continuing Jobless Claims • 2/20 – CPI

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