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Home Prices Rose 5.1% Year-over-Year, Increases Ease in May

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July 26th, 2016

With today's release of the May S&P/Case-Shiller Home Price we learned that seasonally adjusted home prices for the benchmark 20-city index were down -0.1% month over month. The seasonally adjusted year-over-year change has hovered between 4.4% and 5.4% for the last twelve months.

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Richmond Fed: Manufacturing Activity Improves in July

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July 26th, 2016

Today the Richmond Fed Manufacturing Composite Index jumped 20 points to 10 from last month's revised -10. Investing.com had forecast -4. Because of the highly volatile nature of this index, we include a 3-month moving average to facilitate the identification of trends, now at 0.3, still indicating expansion.

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Consumer Confidence Held Steady in July

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July 26th, 2016

The latest Conference Board Consumer Confidence Index was released this morning based on data collected through July 14. The headline number of 97.3, was slight decline from the June final reading of 97.4 in June Today's number was above the Investing.com consensus of 95.9.

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June New Home Sales Jump 3.5% Month-over-Month, Better Than Forecast

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July 26th, 2016

This morning's release of the June New Home Sales from the Census Bureau came in at 592K, up 3.5% month-over-month from a revised 572K in May. Seasonally adjusted estimates for March and April were revised. The Investing.com forecast was for 560K.

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Markit Services PMI Remained Muted in July

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July 26th, 2016

The July preliminary US Services Purchasing Managers' Index conducted by Markit came in at 50.9, down from 51.3 in June and below the Investing.com consensus of 52.0. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.

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Weekly Gasoline Price Update: Regular and Premium Down for Sixth Consecutive Week

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July 25th, 2016

It's time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium five and four cents each, respectively, from last week. According to GasBuddy.com, California has the highest average price for Regular at $2.79 and San Francisco is averaging $2.96. South Carolina has the cheapest at $1.83. The WTIC end of day spot price closed at 43.13, a decrease of 2.81 from this time last week.

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S&P 500 Snapshot: A Weak Start to the Week

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July 25th, 2016

Global equity indexes outside the US were mixed today, and the big three US indexes were uniformly negative. The NASDAQ finished fractionally lower at -0.5%, while the Dow and S&P 500 settled at bit lower at -0.31% and -0.30%, respectively. Our benchmark 500 opened lower and sold off to its -0.60% intraday low during the lunch hour. It then struggled higher in a couple of waves to half its loss at -0.30%. The popular financial press pointed fingers at oil for the weak session. West Texas Intermediate Crude fell 2.40% to its lowest close in exactly three months.

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Dallas Fed Manufacturing Outlook: Activity Stabilizes in July, Outlook Improving

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July 25th, 2016

This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for July. The latest general business activity index increased in July, up 17 points, coming in at -1.3, up from -18.3 in June. Other measures of manufacturing activity reflected increasing and improving conditions.

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NYSE Margin Debt and the Market

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July 25th, 2016

Note: The NYSE has released new data for margin debt, now available through June. We've updated the charts in this commentary to include the latest numbers.

The NYSE margin debt data is a few weeks old when it is published. The latest debt level is down 0.8% month-over-month, the second consecutive month of decline, but it is still off its interim low set in February. This metric is well below its record high set 14 months ago in April of last year.

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World Markets Weekend Update: The Global Rally Moderates

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July 23rd, 2016

The global rally in equities Moderated last week. The average gain of the eight indexes on our world watch list was a respectable 0.41%, down from the previous week's steroidal 3.87% average. Hong Kong's Hang Seng was the top performer with a 1.41% advance. At the other end, the chronic laggard Shanghai Composite fell 1.36%.

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Best Stock Market Indicator Update

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July 22nd, 2016

According to this system, the market is now tradable and a signal to enter and continue all long trading. The OEXA200R is at 84% and all three secondary indicators are positive.

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Gasoline Volume Sales and our Changing Culture

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July 22nd, 2016

The Department of Energy's Energy Information Administration (EIA) monthly data on volume sales is several weeks old when it released. The latest numbers, through mid-May, are now available. However, despite the lag, this report offers an interesting perspective on fascinating aspects of the US economy. Gasoline prices and increases in fuel efficiency are important factors, but there are also some significant demographic and cultural dynamics in this data series.

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ECRI Weekly Leading Index: WLI Up 1.1, Growth Index Highest Since 2013

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July 22nd, 2016

Today's release of the publicly available data from ECRI (Economic Cycle Research Institute) puts its Weekly Leading Index (WLI) at 138.1, up 1.1 from the previous week. Year-over-year the four-week moving average of the indicator is now at 3.00%, up from 2.53% the previous week. The company's Weekly Leading Index annualized growth indicator (WLIg) is at 7.5, up from last week, its highest since February 2013.

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The Philly Fed ADS Business Conditions Index Update

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July 22nd, 2016

The Philly Fed's Aruoba-Diebold-Scotti Business Conditions Index (hereafter the ADS index) is a fascinating but relatively little known real-time indicator of business conditions for the U.S. economy, not just the Third Federal Reserve District, which covers eastern Pennsylvania, southern New Jersey, and Delaware. Thus it is comparable to the better-known Chicago Fed's National Activity Index.

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RecessionAlert Weekly Leading Index Update

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July 21st, 2016

RecessionAlert has launched an alternative to ECRI's Weekly Leading Index Growth indicator (WLIg). The Weekly Leading Economic Index (WLEI) uses fifty different time series from these categories: Corporate Bond Composite, Treasury Bond Composite, Stock Market Composite, Labor Market Composite, Credit Market Composite. The latest index reading comes in at 14.0, up from the previous week's 11.7.

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Real Median Household Income Up Slightly in June

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July 21st, 2016

The Sentier Research median household income data for June, released this morning, came in at $57,206. The nominal median rose $353 month-over-month and is up $1,991 year-over-year. In percentages, the June number is up 0.6% MoM and 3.6% YoY. Adjusted for inflation, the latest income was up $231 MoM and $1,408 YoY. The real numbers equate to increases of 0.4% MoM and 2.5% YoY.

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Understanding the CFNAI Components

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July 21st, 2016

The Chicago Fed's National Activity Index, which we reported on yesterday, is based on 85 economic indicators drawn from four broad categories of data:

  • Production and Income
  • Employment, Unemployment, and Hours
  • Personal Consumption and Housing
  • Sales, Orders, and Inventories

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Existing-Home Sales: Fourth Consecutive Increase

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July 21st, 2016

This morning's release of the June Existing-Home Sales increased from the previous month to a seasonally adjusted annual rate of 5.57 million units from a downwardly revised 5.51 million in May. The Investing.com consensus was for 5.48 million. The latest number represents a 1.1% increase from the previous month and a 3.0% increase year-over-year.

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FHFA House Price Index Up 0.2% in May

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July 21st, 2016

The Federal Housing Finance Agency (FHFA) has released the U.S. House Price Index (HPI) for the most recent month. U.S. house prices rose slightly in May, up 0.2 percent on a seasonally adjusted basis from the previous month. Year-over-year the index is up 5.5% (nonseasonally adjusted).

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Conference Board Leading Economic Index "Picked Up in June"

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July 21st, 2016

The Latest Conference Board Leading Economic Index (LEI) for June increased 0.3 percent to 123.7 from May's revised 123.3 (previously 123.7) and downward revisions were made to the four prior months. The latest indicator value came in above the 0.2 month-over-month percent forecast by Investing.com. However, the the MoM would have been 0.0% without the revision to the prior month.

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Weekly Unemployment Claims: Down 1K from Last Week, Better Than Forecast

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July 21st, 2016

Today's seasonally adjusted 253K new claims, down 1K from last week's number, was below the Investing.com forecast of 265K. This is the 72nd consecutive week under 300K, the longest streak since 1973.

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Chicago Fed: Economic Growth Picked Up in June

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July 21st, 2016

"Index shows economic growth picked up in June": This is the headline for today's release of the Chicago Fed's National Activity Index. Here is the opening summary: "Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.16 in June from –0.56 in May. Three of the four broad categories of indicators that make up the index increased from May, and two of the four categories made positive contributions to the index in June."

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Philly Fed Manufacturing Index: "Fell Slightly in July"

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July 21st, 2016

The latest Manufacturing Index came in at -2.9, down from last month's 4.7. The 3-month moving average came in at 0.0, up down from 0.4 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook came in at 33.7, an increase over the previous month's 29.8.

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Vehicle Miles Traveled: The Latest Look at Our Evolving Behavior

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July 20th, 2016

The Department of Transportation's Federal Highway Commission has released the latest report on Traffic Volume Trends, data through May.

"Travel on all roads and streets changed by 2.0% (5.5 billion vehicle miles) for May 2016 as compared with May 2015." The less volatile 12-month moving average was up 0.17% month-over-month and 3.1% year-over-year. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) is up 0.10% month-over-month and up 2.3% year-over-year.

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Five Decades of Middle Class Wages: June 2016 Update

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July 20th, 2016

We've updated this series to include last week's release of the Consumer Price Index as the deflator and the June monthly update. The latest hypothetical annual earnings are at $36,137, down 13.5% from 44 years ago.

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Secular Trends in Residential Building Permits and Housing Starts

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July 19th, 2016

Over the long haul the two series offer a compelling study of trends in residential real estate. Here is an overlay of the two series since the 1959 inception of the Starts data and the Permits data, which began being tracked a year later. The monthly data points are preserved as faint dots. The trends are illustrated with 6-month moving averages of data divided by the Census Bureau's mid-month population estimates.

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New Residential Housing Starts in June Top Expectations

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July 19th, 2016

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for June new residential housing starts. The latest reading of 1.189M was above the Investing.com forecast of 1.170M. The May count was revised downward by 29 thousand and the April downward by 12 thousand.

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New Residential Building Permits: June Count Beats Forecast

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July 19th, 2016

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for June new residential building permits. The latest reading of 1.161M was an increase over 1.138M in May and above the Investing.com forecast of 1.150M.

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A Long-Term Look at Inflation

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July 18th, 2016

The Consumer Price Index for Urban Consumers (CPI-U) released Friday puts the year-over-year inflation rate at 1.01%. It is substantially below the 3.79% average since the end of the Second World War and its 10-year moving average, now at 1.83%.

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Inflation: An X-Ray View of the Components

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July 18th, 2016

Here is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, for each of the past six months. Also included are the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation. We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.

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NAHB Housing Market Index: Down One Point, Remains Steady

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July 18th, 2016

The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook. The latest reading of 59 was a one point drop and slightly below the Investing.com forecast of 60.

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What Inflation Means to You: Inside the Consumer Price Index

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July 18th, 2016

Let's do some analysis of the Consumer Price Index, the best known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.

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Treasury Snapshot: The Flight to Treasuries

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July 15th, 2016

Let's take a closer look at US Treasuries in the wake of the turmoil in Europe following the Brexit leave vote in the UK. The flight to treasuries accelerated dramatically, with the yield on the 10-, 20- and 30-year instruments hitting record lows. The yield on the 10-year note ended the day today at 1.60%, down 7 BPs. The 30-year bond closed at 2.30%.

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The Big Four Economic Indicators: June Real Retail Sales Improved

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July 15th, 2016

Note: With the release of this morning's Consumer Price Index, we've updated this commentary to include the Real Retail Sales data for June.

Nominal sales rose 0.6% (0.58% to two decimals). Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, rose 0.4% (0.36% to two decimals) month-over-month, an improvement over the previous month's flatline at -0.01%. The chart gives us a close look at the monthly data points in this series since the end of the last recession in mid-2009. The linear regression helps us identify variance from the trend.

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Michigan Consumer Sentiment: July Preliminary Worse Than Expected

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July 15th, 2016

The University of Michigan Preliminary Consumer Sentiment for July came in at 89.5, a 4.0 point decrease from the 93.5 June Final reading. Investing.com had forecast 93.5.

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The Big Four Economic Indicators: June Industrial Production Rebounds

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July 15th, 2016

Today's report on Industrial Production for June shows a month-over-month increase of 0.6 percent, which was better than the Investing.com consensus of 0.2 percent. The previous month's 0.4 percent decline was revised upward to a 0.3 percent decline. The June advance is a welcome rebound for in indicator that has contracted for 14 of the last 19 months, although on a quarterly basis, Industrial Production has contracted for the past three quarters.

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June Retail Sales Beat Expectations

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July 15th, 2016

The Census Bureau's Advance Retail Sales Report released this morning shows that the seasonally adjusted sales series increased in June. Headline sales came in at 0.6% month-over-month (0.58% to two decimal places), which was above the 0.3% increase forecast by Investing.com. Note, however, that this gain was boosted by the downward revision of the previous month from 0.4% to 0.2%. Headline sales are up 2.7% year-over-year. Core Retail Sales (ex Autos) came in at 0.7% MoM (0.71% to two decimals), beating the Investing.com forecast of 0.4%.

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Consumer Price Index: Virtually Unchanged

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July 15th, 2016

The Bureau of Labor Statistics released the May CPI data this morning. The year-over-year nonseasonally adjusted Headline CPI came in at 1.01%, essentially unchanged from 1.02% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.26%, also essentially unchanged from the previous month's 2.24%, although rounded to a decimal it's slight increase from 2.2% to 2.3%.

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Empire State Manufacturing Flattened in June

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July 15th, 2016

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 0.6 (0.55 to two decimals) shows a significant decrease from last month's 6.01, and just barely signals improving activity. The Investing.com forecast was for a reading of 54.00.

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Producer Price Index: Biggest Increase in 45 Months

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July 14th, 2016

Today's release of the June Producer Price Index (PPI) for Final Demand came in at 0.5% month-over-month seasonally adjusted, up from 0.4% in May. This is the largest seasonally adjusted MoM increase since September 2012, 45 months ago. It is up 0.3% year-over-year, up from 0.0% in the previous month. Core Final Demand (less food and energy) came in at 0.4% MoM, up from 0.3% the previous month and is up 1.3% YoY. The Investing.com forecasts were for 0.3% headline and 0.1% core.

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What Would It Take for the Prime U.S. Workforce to Fully Recover?

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July 13th, 2016

We've updated our workforce analysis to include last week's Employment Report for June. The unemployment rate increased to 4.9% and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) was at 287K with a downward revision to last month's numbers for a loss of 11K.

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Secular Trends in Employment: Goods Producing Versus Services Providing

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July 13th, 2016

The Department of Labor's Bureau of Labor Statistics has monthly data on employment by industry categories reaching back to 1939. At the highest level, all jobs are divided into two categories: Service-Providing Industries and Goods Producing Industries. The adjacent chart illustrates the ratio of the two categories since 1939.

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Demographic Trends for the 50-and-Older Work Force

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July 13th, 2016

Note: This commentary has been updated with the latest numbers from last week's Employment Report.

This is not the scenario that would have been envisioned a generation ago for the "Golden Years" of retirement. Consider: Today nearly one in three of the 65-69 cohort and about one in five of the 70-74 cohort are in the labor force.

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The Latest Look at Long-Term Trends in Employment by Age Group

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July 12th, 2016

The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution). The result is the participation rate expressed as a percent.

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The Big Four Economic Indicators: June Nonfarm Employment

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July 12th, 2016

This commentary has been updated to include last week's release of Nonfarm Employment for June. As the adjacent thumbnail of the past year illustrates, Nonfarm Employment remains in its upward. The June report of 287K new jobs was substantially above expectations (Investing.com was looking for 175K). The June data reversed the surprisingly weak May report of only 11K new jobs, a downward revision from the initial estimate of 38K.

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Job Openings & Labor Turnover: Clues to the Business Cycle

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July 12th, 2016

The latest JOLTS report (Job Openings and Labor Turnover Summary), data through May, is now available. The time frame is quite limited compared to the main BLS data series in the monthly employment report, many of which go back to 1948, and the enormously popular Nonfarm Employment (PAYEMS) series goes back to 1939, while the BLS began tracking JOLTS in December 2000. Nevertheless, there are some clear JOLTS correlations with the most recent business cycle trends.

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NFIB: Small Business Survey Rises Modestly Again in June

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July 12th, 2016

The latest issue of the NFIB Small Business Economic Trends is out today. The headline number for June came in at 94.5, up 0.7 from the previous month's 93.8. The index is at the 25th percentile in this series. Today's number came in above the Investing.com forecast.

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Multiple Jobholders: Two Decades of Trends as of June

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July 11th, 2016

What are the long-term trends for multiple jobholders in the US? The Bureau of Labor Statistics has two decades of historical data to enlighten us on that topic, courtesy of Table A-16 in the monthly Current Population Survey.

At present, multiple jobholders account for about five percent of civilian employment. The survey captures data for four subcategories of the multi-job workforce, the current relative sizes of which we've illustrated in a pie chart.

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Ratio of Part-Time Employed Remains Higher Than the Pre-Recession Levels

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July 11th, 2016

Let's take a close look at Friday's employment report numbers on Full and Part-Time Employment. Buried near the bottom of Table A-9 of the government's Employment Situation Summary are the numbers for Full- and Part-Time Workers, with 35-or-more hours as the arbitrary divide between the two categories. The source is the monthly Current Population Survey (CPS) of households. The focus is on total hours worked regardless of whether the hours are from a single or multiple jobs.

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The Labor Market Conditions Index for June Remains Negative

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July 11th, 2016

Despite the favorable jobs report for June, the latest update of the Labor Market Conditions Index remains negative. The LMCI is a relatively recent indicator developed by Federal Reserve economists to assess changes in the labor market conditions. The release of the June LMCI data came in at -1.9, up from an upwardly revised -3.6 in May (previously -4.8). The cumulative index (discussed below) peaked six months ago in December 2015.

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Treasury Yields: A Long-Term Perspective

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July 8th, 2016

Let's have a look at a long-term perspective on Treasury yields. The chart here shows the 10-Year Constant Maturity yield since 1962 along with the Federal Funds Rate (FFR) and inflation. The range has been astonishing. The stagflation that set in after the 1973 Oil Embargo was finally ended after Paul Volcker raised the FFR to 20.06%.

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The Civilian Labor Force, Unemployment Claims and the Business Cycle

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July 8th, 2016

What does the ratio of unemployment claims tell us about where we are in the business cycle and our current recession risk? At present, the ratio for Continued Claims has been trending down. Excluding the 1981 recession, the Initial Claims trough lead time for a recession has ranged from 7 to 22 months with an average of 12 months if we include the 1981 recession and 14 months if we exclude it. Admittedly, the last recession is an extreme example, but the Initial Claims trough preceded its December 2007 onset by a whopping 22 months.

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June New Jobs Bounce Back, Surprise Forecast

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July 8th, 2016

Today's report of 287K new nonfarm jobs in June was much better than the Investing.com forecast of 175K. May was revised further downward for an 11K loss. The unemployment rate was back up, now at 4.9%.

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A Closer Look at the This Morning's ADP Employment Report

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July 7th, 2016

In this morning's ADP employment report we got the June estimate of 172K new nonfarm private employment jobs, an increase from May's 168K, which was a downward revision from 173K. The popular spin on this indicator is as a preview to the monthly jobs report from the Bureau of Labor Statistics. But the ADP report includes a wealth of information that's worth exploring in more detail.

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Anticipating June Employment Data: 172K New Nonfarm Private Jobs

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July 7th, 2016

The economic mover and shaker this week is Friday's employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, the most publicized being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository). Today we have the June estimate of 172K new nonfarm private employment jobs from ADP, an increase from May's 168K, which was a downward revision from 173K.

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Market Remains Overvalued, Up Slightly from Last Month

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July 6th, 2016

Here is a summary of the four market valuation indicators we update on a monthly basis.

  • The Crestmont Research P/E Ratio
  • The cyclical P/E ratio using the trailing 10-year earnings as the divisor
  • The Q Ratio, which is the total price of the market divided by its replacement cost
  • The relationship of the S&P Composite price to a regression trendline

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Market Valuation, Inflation and Treasury Yields: Clues from the Past

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July 6th, 2016

Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a "normal" market environment -- one with conventional business cycles, Federal Reserve policy, interest rates and inflation -- current valuation levels would be a serious concern.

But these are different times.

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ISM Non-Manufacturing: PMI Up in June, Signals Continued Growth

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July 6th, 2016

Today the Institute for Supply Management published its latest Non-Manufacturing Report. The headline NMI Composite Index is at 56.5 percent, up 3.6 percent from last month's seasonally adjusted 52.9 percent. Today's number came in above the Investing.com forecast of 53.3 percent.

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May Trade Deficit Up 3.8B from Revised April

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July 6th, 2016

The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services.

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Market Cap to GDP: An Updated Look at the Buffett Valuation Indicator

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July 5th, 2016

With last week's release of the Third Estimate of Q1 GDP, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 119.0%, up from 112.9% for the Second Estimate. It is off its 130.9% interim high in Q1 of 2105 and remains under 2 standard deviations from its mean.

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The Q Ratio and Market Valuation: June Update

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July 5th, 2016

The Q Ratio is a popular method of estimating the fair value of the stock market developed by Nobel Laureate James Tobin. It's a fairly simple concept, but laborious to calculate. The Q Ratio is the total price of the market divided by the replacement cost of all its companies.

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Is the Stock Market Cheap?

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July 5th, 2016

Here is a new update of a popular market valuation method using the most recent Standard & Poor's "as reported" earnings and earnings estimates and the index monthly average of daily closes for the past month. For the earnings, see the table below created from Standard & Poor's latest earnings spreadsheet.

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The S&P 500, Dow and Nasdaq Since Their 2000 Highs

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July 4th, 2016

This update is a response to a standing request from a couple of sources that we also share with regular visitors to my Advisor Perspectives pages. The request is for real (inflation-adjusted) charts of the S&P 500, Dow 30, and Nasdaq Composite. Here two overlays — one with the nominal price, excluding dividends, and the other with the price adjusted for inflation based on the Consumer Price Index for Urban Consumers (which is usually just refer to as the CPI).

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A Perspective on Secular Bull and Bear Markets

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July 4th, 2016

Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? At this point, seven years later, the S&P 500 has set an inflation-adjusted record high.

Let's examine the past to broaden our understanding of the range of historical trends in market performance. An obvious feature of this inflation-adjusted series is the pattern of long-term alternations between up-and down-trends.

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Light Vehicle Sales Per Capita: Our Latest Look at the Long-Term Trend

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July 1st, 2016

For the past few years we've been following a couple of transportation metrics: Vehicle Miles Traveled and Gasoline Volume Sales. For both series we focus on the population adjusted data. Let's now do something similar with the Light Vehicle Sales report from the Bureau of Economic Analysis. This data series stretches back to January 1976. Since that first data point, the Civilian Noninstitutional Population Age 16 and Over (i.e., driving age not in the military or an inmate) has risen 63%.

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ISM Manufacturing Index: Continuing Expansion in June

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July 1st, 2016

Today the Institute for Supply Management published its monthly Manufacturing Report for June. The latest headline PMI was 53.2 percent, an increase of 1.9 percent from the previous month and above the Investing.com forecast of 51.4.

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Crestmont Market Valuation Update

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July 1st, 2016

Quick take: Based on the June S&P 500 average of daily closes, the Crestmont P/E is 89% above its arithmetic mean and at the 97th percentile of this fourteen-plus-decade monthly metric.

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Regression to Trend: The Latest Look at Long-Term Market Performance

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July 1st, 2016

Quick take: At the end of June the inflation-adjusted S&P 500 index price was 82% above its long-term trend, up slightly from 81% the previous month.

About the only certainty in the stock market is that, over the long haul, over performance turns into under performance and vice versa. Is there a pattern to this movement? Let's apply some simple regression analysis to the question.

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Moving Averages: June Month-End Update

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June 30th, 2016

Valid until the market close on July 29, 2016

The S&P 500 closed June with a monthly gain of 0.09% after a gain of 1.53% last month. All three S&P 500 MAs are signaling "invested" and all five Ivy Portfolio ETF MAs are signaling "invested". In the table, monthly closes that are within 2% of a signal are highlighted in yellow.

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The Big Four Economic Indicators: Real Personal Income for May

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June 30th, 2016

Personal Income (excluding Transfer Receipts) in May rose 0.25% and is up 4.1% year-over-year. When we adjust for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) rose 0.08%. The real number is up 3.1% year-over-year.

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Chicago PMI Rebounds in June

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June 30th, 2016

The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, rebounded in June to a value of 56.8 from last month's 49.3, it's highest since January 2015. Values lower than 50.0 indicate contracting manufacturing activity.

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Moving Averages: Month-End Preview

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June 29th, 2016

Here is an advance preview of the monthly moving averages we track after the close of the last business day of the month. At this point, before the close on the last day of the month, all three S&P 500 strategies are signaling "invested" — unchanged from last month's triple "invested" signal. Four of five Ivy Portfolio ETFs — Vanguard Total Stock Market ETF (VTI), iShares' Barclays 7-10 Year Treasury (IEF), PowerShares DB (DBC) and Vanguard REIT Index ETF (VNQ), — are signaling "invested", changed from last month's all invested signal.

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Regional Fed Manufacturing Overview: June Decline

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June 29th, 2016

The Federal Reserve System consists of twelve Federal Reserve Banks, twenty five branches, and the Board of Governors in Washington, D.C. Each bank serves a larger regional district. Five out of the twelve Federal Reserve Regional Districts currently publish monthly data on regional manufacturing: Dallas, Kansas City, New York, Richmond, and Philadelphia. The average of the five for June is -3.1, down from last month's -1.2.

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Two Measures of Inflation and Fed Policy

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June 29th, 2016

The BEA's Personal Consumption Expenditures Chain-type Price Index for May, released today, shows that core remains inflation below the Federal Reserve's 2% long-term target at 1.62%, The latest YoY Core PCE index (less Food and Energy) came in at 1.62%, virtually unchanged from the previous month's downwardly revised 1.58% and down from its February reading of 1.72%, which was the highest since late 2012. The most recent Core Consumer Price Index release, also data through May, is higher at 2.24%. The Fed is on record as using Core PCE data for its primary inflation gauge.

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Pending Home Sales Declined in May, Disappoint Expectations

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June 29th, 2016

Today the National Association of Realtors released the May data for their Pending Home Sales Index. According to the National Association of Realtors®, "After steadily increasing for three months, pending home sales let up in May and declined year-over-year for the first time in almost two years."

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May Real Disposable Income Per Capita Up 0.18%, 0.02% in Real Terms

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June 29th, 2016

With the release of today's report on May Personal Incomes and Outlays we can now take a closer look at "Real" Disposable Personal Income Per Capita.

At two decimal places, the nominal 0.18% month-over-month increase in disposable income comes in at 0.02% when we adjust for inflation. The year-over-year metrics are 3.33% nominal and 2.38% real.

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Minimal Change in the May PCE Price Index

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June 29th, 2016

The Personal Income and Outlays report for May was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index year-over-year (YoY) rate is 0.93%, down from the previous month's revised 1.07% (previously 1.09%). The latest YoY Core PCE index (less Food and Energy) came in at 1.62%, virtually changed from the previous month's revised 1.58%.

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Visualizing GDP: An Inside Look at the Q1 Third Estimate

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June 28th, 2016

The accompanying chart is a way to visualize real GDP change since 2007. It uses a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics.

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Q1 GDP Per Capita Third Estimate Remains in Positive Territory

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June 28th, 2016

The Third Estimate for Q1 GDP, to one decimal, came in at 1.1 percent, up from the the 0.8 percent of Second Estimate. With a per-capita adjustment, the data series remains in positive territory at 0.39 percent. The 10-year moving average illustrates that US economic growth has slowed dramatically since the last recession.

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Q1 GDP Third Estimate Slightly Better Than Forecast at 1.1 Percent

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June 28th, 2016

The Third Estimate for Q1 GDP, to one decimal, came in at 1.1 percent, up from 0.8 percent in last month's Second Estimate. Today's number was a bit above most mainstream estimates, with Investing.com forecasting 1.0 percent and the Briefing.com consensus also at 1.0 percent.

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The "Real" Goods on the May Durable Goods Data

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June 24th, 2016

Earlier today the Census Bureau posted the Advance Report on May Durable Goods New Orders. This series dates from 1992 and is not adjusted for either population growth or inflation. Let's now review Durable Goods data with two adjustments. In the charts the gray line shows the goods orders divided by the Census Bureau's monthly population data, giving us durable goods orders per capita. The blue line goes a step further and adjusts for inflation based on the Producer Price Index for All Commodities, chained in today's dollar value.

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May Durable Goods Orders Down 2.2%, Core Down 0.3%, ex-Defense Down 0.9%

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June 24th, 2016

The Advance Report on Manufacturers’ Shipments, Inventories and Orders released today gives us a first look at the May durable goods numbers. The latest new orders number at -2.2% month-over-month (MoM) was well below the Investing.com estimate of -0.5%. This series is up 3.2% year-over-year (YoY). If we exclude transportation, "core" durable goods came in at -0.3% MoM, which was below the Investing.com estimate of 0.2%. The core measure is down 0.4% YoY.

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Kansas City Fed Survey: June Activity First Positive Reading of 2016

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June 23rd, 2016

The latest index came in at 2.0, which indicates improving activity and its first positive reading of 2016. The future outlook increased to 7.0 from 4.0 last month. Here is a snapshot of the complete Kansas City Fed Manufacturing Survey.

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Brace Yourself: Our Latest Look at Student Debt

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June 13th, 2016

College Tuition and Fees constitute one of the biggest threats to our economic outlook. Here is a chart of data from the relevant Consumer Price Index sub-component reaching back to 1978, the earliest year Uncle Sam provides a breakout for College Tuition and Fees. As an interesting sidebar, we've thrown in the increase in the cost of purchasing a new car as well as the more substantial increase for the broader category of medical care, both of which pale in comparison.

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The Fed's Financial Accounts: What Is Uncle Sam's Largest Asset?

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June 13th, 2016

Pop Quiz! Without recourse to your text, your notes or a Google search, what line item is the largest asset in Uncle Sam's financial accounts?

  • A) U.S. Official Reserve Assets
  • B) Total Mortgages
  • C) Taxes Receivable
  • D) Student Loans

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Household Net Worth: The "Real" Story

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June 9th, 2016

Let's take a long-term view of household net worth from the latest Z.1 release. A quick glance at the complete data series shows a distinct bubble in net worth that peaked in Q4 2007 with a trough in Q1 2009, the same quarter the stock market bottomed. The latest Fed balance sheet shows a total net worth at an all-time high — 61.2% above the 2009 trough and 20.1% above the 2007 peak. The nominal Q1 net worth is up 0.9% from the previous quarter and 1.3% year-over-year.

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Trends in the Teenage Workforce Update

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June 7th, 2016

Last July CNN Money featured an article with the optimistic and intriguing title "More American teens are getting jobs. That's good for everyone." After reading the article, we revised one of our monthly charts on Labor Force Participation to include the age 16-19 cohort -- one we elsewhere combine with the 20-24 year-olds. We've updated this article to include the latest employment data.

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49 Years of Income and Home Values

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May 25th, 2016

Often conversations about home buying end up in discussions on the high cost of homes today and their affordability – or lack thereof. We decided to take a look at the long-term trends in home prices in comparison to income and found that incomes have been stagnant since the early 1970s, while home prices have risen dramatically in comparison.

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The Four Totally Bad Bear Recoveries: Where Is Today's Market?

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April 25th, 2016

This chart series features an overlay of the Four Bad Bears in U.S. history since the equity market peak in 1929. They are:

  1. The Crash of 1929
  2. The Oil Embargo of 1973
  3. The 2000 Tech Bubble bust and,
  4. The Financial Bubble and Crisis.

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Equity Valuations, Recessions and Stock Market Declines

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April 12th, 2016

Note: In response to an email, I've updated the data in this article through the March month-end numbers and at the launch of the Q1 2016 earnings season.

Last year I had a fascinating conversation with Neile Wolfe, of Wells Fargo Advisors, LLC. Based on the underlying data in the adjacent chart, Neile made some cogent observations about the historical relationships between equity valuations, recessions and market prices:

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Industrial Production: Those Ugly Annual Benchmark Revisions and the Heightened Risk of Recession

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April 4th, 2016

The big economic news on Friday was the Department of Labor's Employment Report for March. The mainstream press focused on two numbers: the 215K new jobs and the 5% unemployment rate. Over the next few days we'll dig in a bit deeper to look at some of the underlying employment demographics, which in many ways give a greater understanding of employment conditions. But the much more significant economic news on Friday was the Federal Reserve's noon release of the disturbingly negative annual benchmark revisions to Industrial Production.

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Weekly Heating Oil Price Update: US Average Unchanged, Last Update of Season

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March 30th, 2016

The latest price for home heating oil nationwide is $2.13 per gallon, unchanged from last week. This season, heating oil prices on average have dropped 29 cents per gallon in the US. With winter at a close, we are at the end of the heating oil season. This year's winter was warmer than average and saw a continued drop in heating oil prices, but with a slight uptick toward the season close. The end-of-season jump in prices reflects the crude oil uptick we've seen recently.

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Another Look at the Total Return Roller Coaster

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January 11th, 2016

Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $17,357 for an annualized real return of 11.08%.

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Household Incomes: The Value of Higher Education

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October 19th, 2015

What is the value of education for household income? The Census Bureau's annual survey data for 2014 published last month gives us some interesting insights into this question. The median income for all households with a householder age 25 and older was $55,283. The chart below shows the median annual household income for nine cohorts by educational attainment. We've rounded the data points to the nearest $100, e.g. $55.3K for all households.

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Household Incomes: The Decline of the "Middle Class"

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October 13th, 2015

The median household is the statistical center of the Middle Class. In terms of income, this class has not fared well in recent decades. Let's take a closer look at a troubling aspect of the Census Bureau's latest annual household income data, issued last month. In this update we'll focus on the growing gap between the median (middle) and mean (average) household incomes across the complete time frame of the Census Bureau's annual reporting, which began in 1967, to the release last month of the annual data for 2014.

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Household Incomes Across Time: The Divergence at the Top

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October 7th, 2015

Among the most interesting of the long-term economic indicators we track is the Census Bureau's annual data on the mean (average) household income received by each fifth (quintile) and top 5 percent. See our latest update here. A conspicuous pattern in the series is the widening of the spread in income growth that started during the 1980s.

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Median Household Income Growth: Deflating the American Dream

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September 23rd, 2015

What is the single best indicator of the American Dream? Many would point to household income growth. The Census Bureau has now published some selected annual household income data in a new report: "Income and Poverty in the United States: 2014". Last year the median (middle) household income was $53,657 — a 0.13% year-over-year increase that shrinks to -1.48% when adjusted for inflation. Let's put the new release into a larger historical context.

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Median Home Price and Salary Required in 27 Major Cities

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September 23rd, 2015

Tim Manni, the Managing Editor at HSH.com, features a periodic update entitled "The Salary You Must Earn to Buy a Home in 27 Metros". The key question is:

"How much salary do you need to earn in order to afford the principal and interest payments on a median-priced home in your metro area?"

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Median Household Purchasing Power for the 50 States and DC

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September 22nd, 2015

Last week we posted an update on the median household income by the 50 states and DC based on the Current Population Survey, a joint undertaking of the Census Bureau and Bureau of Labor Statistics, which includes annual data from 1984 to 2014. Let's now look at the actual purchasing power of those median incomes. For this adjustment we're using the "C2ER Cost of Living Index" produced by C2ER, the Council for Community and Economic Research.

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Median Household Income by State: A New Look at the Data

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September 18th, 2015

The Census Bureau's annual household income reports for 2014 is now available. We've now compiled a few tables for the 50 states and DC based on the Current Population Survey, a joint undertaking of the Census Bureau and Bureau of Labor Statistics, which includes annual data from 1984 to 2014. The details are fascinating.

First, some context. The median US income in 2014 was $53,657, up from $22,415 in 1984 -- a 139.4% rise over the 30-year time frame.

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Median Household Incomes by Age Bracket: 1967-2014

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September 17th, 2015

Earlier today we updated our commentary on household income distribution to include the Census Bureau's release of the 2014 annual data. Our focus was on arithmetic mean (average) household incomes by quintile (and the top 5%) over the 46-year history of this data series. The analysis offered some fascinating insights into U.S. household incomes. But the classification misses the implications of age for income. Households are by no means locked into the same quintile over time.

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U.S. Household Incomes: A 47-Year Perspective

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September 17th, 2015

The Census Bureau has now released its annual report household income data for 2014. This update features an analysis of the quintile breakdown of data from 1967 through 2014 along with the statistics for the top 5%.

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Millennials and the Labor Force: A Look at the Trends

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July 29th, 2015

We have added Millennials to our series of employment demographics. The general consensus is that the Millennial cohort consists of people born between the early 1980s to the early 2000s. In this study we will focus on the Bureau of Labor Statistics data for the those born between 1981 and 2000.

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