Economics

Discussion in 'Money & Finances' started by Harry Havens, Jun 29, 2017.

  1. Harry Havens

    Harry Havens Well-Known Member
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    I have to give this Bloomberg author credit for optimism with this article on wages and employment.
    Citing the BLS...
    The article filled with optimism and it might be warranted, if not for another report from that same BLS, back in August...
    Granted the Bloomberg report is for August Earnings and the BLS report I cited is for July, but I doubt inflation fell in August. We should know shortly with the next CPI due out on Thursday, along with the real average earnings report. Just click on the BLS link above and see for yourself on Thursday. BTW, the CPI-U is forecast at 2.8%, with a range of 2.7%~3.0%.

    Is the glass half full, or half empty?
     
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  2. Harry Havens

    Harry Havens Well-Known Member
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    The latest Supplemental Poverty Measure for 2017 was released yesterday. The oft cited standard poverty measure uses a blanket cost in the 48 states and separate figures for Alaska and Hawaii. The supplemental delves into variations in cost of living from state to state.

    Cost of housing plays a large part in the deviations and larger population centers tend to have higher housing costs and generally higher taxes, more services, etc. It is also easy to assume that housing costs would vary greatly in any state. However population totals are also factored in establishing this report.
    upload_2018-9-13_8-26-29.png

    State by state chart begins on pg. 26.
     
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  3. Harry Havens

    Harry Havens Well-Known Member
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    The August CPI has been released.

    As for C.O.L.A., the CPI-W now looks like this...
    upload_2018-9-13_8-57-46.png

    The 247.870 is just my best guess at this point for the September reading. It should be noted that I originally overestimated the August number and knew it was in trouble when the PPI came out.

    Also the Real Earnings Summary is out. Actually not so bad and maybe the glass is half full.
     
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  4. Harry Havens

    Harry Havens Well-Known Member
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    The September CPI-W is out, as is the SS-OASI, SS-DI and SSI increases.
    upload_2018-10-11_9-55-38.png

    Next month will tell the tale, as Medicare Part B standard premiums will be announced. It has been awhile, but projections had been a modest increase to $135.50... which gets rounded up to $136.
    (The more widely reported CPI-U was also up 2.3% Y/Y and C-CPI-U was up 2.0%)

    While the average was 2.3% Y/Y, energy jumped 4.8%, Shelter up 3.3%... although the latter's rate slowed in September. Notably, cost of new and used vehicles tumbled in September, likely due to ending of a lot of so called "0% interest" financing plans.

    Shelter may also ease as mortgage rates are increasing and hitting the re-fi market. Although the opposite could result as consumers used to ever lowering interest rates come to the realization that now might be the time to lock in those lower rates. Not unlike the 80s. It's a tough one to figure, but many of those loans will be in the 2nd mortgage (equity financing) variety as well. Which screams bubble in a recession.

    Speaking of refinancing, a lot of companies had boosted earnings based on lower interest rate of bond reissuance. That window is closing as well, imo.
     
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  5. Don Alaska

    Don Alaska Very Well-Known Member
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    Stock market has been totally thrown for a loop due the Fed and the interest rate talk....
     
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  6. Harry Havens

    Harry Havens Well-Known Member
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    My non-expert opinion is the market had become frothy and bubbly. A strong case could be made on a market around the 24K range, which it was near about 4 months ago. Hype pushed it up and fundamentals are drawing it back into line.

    According to expert FED watchers, such as Tim Duy... the FED is relentless in its pursuit to keep inflation in check, even to the point of forcing a possible mild recession, although that would be more likely in 2020. The FED, according to Duy is on course for several more rate hikes.

    The question lingering in my mind is where that inflation is occurring. Tariffs are theoretically inflationary as it would drive up the consumer costs of imported materials. So yes a 25% tariff on Chinese goods would drive up prices, but in reality that is 25% on $250B in goods... which is only about 2% of the U.S. consumer economy. About 4 tenths of 1 percent overall. 6 months ago, the Chinese Yuan stood at 6.25 to $1. It is currently in the 6.91 to $1 range. That 10% cut the cost + tariffs to 2 tenths of 1 percent impact on inflation. IT WILL BE USED AS A CATALYST to raise prices.

    Of course, some industries are caught between a rock and a hard place. Auto companies are seeing falling sales, yet wish to raise prices. This should be interesting to watch, imo.
     
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  7. Beatrice Taylor

    Beatrice Taylor Well-Known Member
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    IMO the tariffs drive up the price of all goods covered under the tariff. If Chinese electronic components or auto parts have a 25% tariff then anyone manufacturing a similar product is able to raise prices 20% or more and still remain competitive. Consumers will be the ones paying the price for the tariffs.

    I also think that we are still feeling the adjustment to the new lower corporate tax plan and how businesses will use that money. If they use the money to buy back stock that could drive the market higher and become inflationary.

    I really believe that these things combined are pushing the stock market up into bubble territory and will be what amounts to a pump and dump for the wealthy in this country.

    I think that the Fed is doing the right thing by raising rates but that too will cost us money.

    We'll see.
     
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    Last edited: Oct 13, 2018 at 7:23 PM
  8. Don Alaska

    Don Alaska Very Well-Known Member
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    I am not against tariffs if they are selective. Sure, they may cause some inflation, but full employment is supposed to be inflationary too, and thet doesn't seem to have happened, at least not to the extent expected. That Jim Cramer guy on CNBC is the one I heard talk about the Fed chairman causing trouble where none needs to be. He doesn't like the current guy and would like to go back to the woman who chaired it preciously. He said she consults more of the market. I have no idea.
     
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  9. Harry Havens

    Harry Havens Well-Known Member
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    The employment picture is improving, but not across all sectors. The construction trades is running short handed, even in the skilled trades category... a category that has always shown a willingness to travel. There aren't enough journeymen to go around.

    There are day laborer jobs available, but one has to be willing to travel. That is much the case in several industries. The notion that jobs are opening up everywhere, is not now and will likely never be the case, imo.

    Both hurricanes florence and michael had numerous electrical contractors repairing lines etc., yet they are short handed. People don't like to climb poles, get in buckets, physical labor, travel and do not like the idea of schooling and apprenticeship programs. Pick an excuse and they can make it sound like a terrible deal breaker. I'll stop short of going into a full rant! ;)
     
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    Last edited: Oct 13, 2018 at 9:35 PM
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  10. Beatrice Taylor

    Beatrice Taylor Well-Known Member
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    The natural disasters provide some benefit for the longer term in that all of these people and businesses will need to rebuild using new materials, replace appliances, carpet, furniture, electronics, automobiles, etc...

    Unfortunately when someone suffers another person usually prospers.
     
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