Market and economic update: U.S. economy remains on solid footing

The U.S. economy remains on solid footing, with a 321,000 gain in nonfarm payrolls in November, bringing the measure to its highest 12-month gain since 1999. The unemployment rate remained unchanged at 5.8%, but the U-6 unemployment rate, considered to be a broader measure of the unemployment situation, improved to 11.4%.

Average hourly earnings rose 0.4% for the month, a sign many market watchers saw as positive. However, the year-over-year pace of gains has slowed toward 2% over the past quarter, and unit labor costs fell 1% for the third quarter. Improving wage growth would be a significant positive for the U.S. economy, but for now, wage growth appears to remain stagnant. Economic activity in the fourth quarter may likely slow from the robust pace in the second and third quarters, and without improvements in wage growth, economic activity in 2015 will likely stabilize at a level just below 3%.

Purchasing manager indices for much of the world slowed in November, indicating the pace of global activity continues to downshift. Data indicated slowing growth for the eurozone and China, while Brazil and Russia continue to contract in the face of weaker energy prices. The data seem to confirm our current forecast of slowing activity in Europe and slower growth in China. Brazil and Russia seem to remain mired in recession, which is likely to last until energy prices find their low.

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This information represents the opinion of U.S. Bank and is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness. The organizations mentioned in this publication are not affiliates or associated with U.S. Bank in any way.

Past performance is no guarantee of future results. All performance data, while deemed obtained from reliable sources, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for investment.

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