Morning Business Memo…
These are the best of times for the stock market with six straight days of gains for the Dow, S&P and other averages. Since the start of this year the Dow is up nearly 10 percent. Stock averages have more than doubled in value since the March 9, 2009, when the markets hit multi-year lows during the financial crisis. The most recent rise has been fueled by strong profits and super-low interest rates. But will the good times continue? The recent earnings season – which was better than expected – is now nearly over. The market will need more positive economic numbers to continue its upward trend. The impact of the sequester on the government and defense industry could be a drag in the weeks and months ahead.
A relatively strong jobs report on Friday sparked another stock rally. Another 236,000 new jobs created and a drop in the US unemployment rate to 7.7 percent sound like good news. But the job market still has a long way to go before a return to normal. The US labor force – the number of people who are working for actively looking for a job – fell by another 130,000 in February. If the work force was the same today as it was before the recession the unemployment rate would be over 10 percent. Many who stopped looking were discouraged job seekers. The official numbers may mask a deep crisis in the employment market, especially for low-skilled workers.
By any normal standards China’s economic growth is still very impressive. A Chinese industry group today says auto sales rose 19.5 percent in the first two months of this year. Industrial production gained about 10 percent in the first couple of months of this year compared with 2012. Retail sales rose more than 12 percent – but that was actually less than analysts expected.
US companies are parking more of their profits offshore, where tax rates are lower. A Wall Street Journal analysis of 60 big US companies found that they put $160 billion overseas. “The practice is the result of US tax rules that create incentives for companies to maximize earnings and holdings of foreign subsidiaries,” according to the Journal.
Identity thieves are looking for your Social Security number. ID theft continues to rise, especially at tax time, when many people are carrying W2s and other personal financial documents. Ken Chaplin with the credit reporting firm Experian says don’t leave tax documents in your car: “That’s really where I find a lot of people getting into trouble is when their car is broken into and those documents are stolen,” he says. And beware of phony IRS websites. “You always want to make sure that when you’re working with the IRS that you’re in IRS.gov,” not dot com.
Richard Davies Business Correspondent ABC NEWS Radio ABCNews.com twitter.com/daviesabc