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World Markets Weekend Update: A Worsening Situation Following the Brexit Vote

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June 25th, 2016

Equity markets around the globe plunged on Friday in response the Brexit vote outcome. Actually, prior to the Friday selloff, the week was looking rather positive for our eight-member watch list. Ironically, on a week-over-week basis, the UK's FTSE was the best performer, despite its -3.15% Friday loss. For the second consecutive week, Japan's Nikkei has the painful distinction of being the biggest loser, down 4.15%, which, sadly, is an improvement over its 6.03% rout the previous week.

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S&P 500 Snapshot: Brexit Selloff, Back in the Red Year-to-Date

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June 24th, 2016

In yesterday's S&P 500 update we asked: "Will a Brexit "stay" vote trigger a record close in tomorrow's trade?" Au contraire, mon ami (use of a Eurozone language intended). The "leave" vote triggered a global selloff. The S&P 500 plunged at the open and sold off steadily to its -3.82% intraday low in the final hour. Some volatility in the final minutes trimmed the loss to -3.59%. The index is now back in the red at -0.32% year-to-date. A preliminary read of trading volume is the second highest of the year. Today's decline was the largest since the -3.94% selloff in August of last year.

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Best Stock Market Indicator Update

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June 24th, 2016

According to this system, the market is now untradable and a signal to exit all long trading. The OEXA200R is at 60%, and two of the three secondary indicators are positive.

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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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ECRI Weekly Leading Index: WLI Down Slightly, Growth Index Unchanged

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June 24th, 2016

Today's release of the publicly available data from ECRI (Economic Cycle Research Institute) puts its Weekly Leading Index (WLI) at 136.4, down 0.1 from the previous week. Year-over-year the four-week moving average of the indicator is now at 2.07%, down from 2.09% the previous week and the thirteenth week in positive territory. The company's Weekly Leading Index annualized growth indicator (WLIg) is at 7.1, unchanged from last week and its highest since early May of 2013.

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Michigan Consumer Sentiment: June Final Below Expectations

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June 24th, 2016

The University of Michigan Final Consumer Sentiment for May came in at 93.5, a 1.2 point decrease from the 94.7 May Final reading. Investing.com had forecast 94.0.

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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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Vehicle Miles Traveled: Another Look at Our Evolving Behavior

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June 24th, 2016

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

"Travel on all roads and streets changed by 2.6% (6.8 billion vehicle miles) for April 2016 as compared with April 2015." The less volatile 12-month moving average was up 0.21% 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 0.13% month-over-month and up 2.0% year-over-year.

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RecessionAlert Weekly Leading Index Update

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June 23rd, 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 6.7, up from the previous week's downwardly revised 7.2.

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Understanding the CFNAI Components

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June 23rd, 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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Real Median Household Income Declined Again in May

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June 23rd, 2016

The Sentier Research median household income data for May, released this morning, came in at $56,853. The nominal median declined $390 month-over-month but is up $1,602 year-over-year. In percentages, the May number is down 0.7% MoM but up 2.9% YoY. Adjusted for inflation, the latest income was down $514 MoM but up $1,011 YoY. The real numbers equate to a -0.9% MoM contraction but a 1.8% YoY increase.

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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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Conference Board Leading Economic Index: Decrease in May

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June 23rd, 2016

The Latest Conference Board Leading Economic Index (LEI) for May decreased 0.2 percent to 123.7 from April's unrevised 123.9 (previously 123.4) and small upward revisions were made to January (123.0 to 123.1) and March (123.1 to 123.2). The latest indicator value came in below the 0.1 percent forecast by Investing.com.

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May New Home Sales Drop 6.0% Month-over-Month, Worse Than Forecast

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June 23rd, 2016

This morning's release of the May New Home Sales from the Census Bureau came in at 551K, down 6.0% month-over-month from a revised 586K in April. Seasonally adjusted estimates for February and March were revised. The Investing.com forecast was for 560K.

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Chicago Fed: Economic Growth Slowed in May

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June 23rd, 2016

"Index shows economic growth slowed in May": This is the headline for today's release of the Chicago Fed's National Activity Index. Here is the opening summary: "Led by declines in production-related indicators, the Chicago Fed National Activity Index (CFNAI) fell to –0.51 in May from +0.05 in April. All four broad categories of indicators that make up the index decreased from April, and all four categories made negative contributions to the index in May."

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Weekly Unemployment Claims: Down 18K from Last Week, Better Than Forecast

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June 23rd, 2016

Today's seasonally adjusted 259K new claims, down 18K from last week's 277K, was below the Investing.com forecast of 270K. This is the 68th consecutive week under 300K, the longest streak since 1973.

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Existing-Home Sales in May Highest Pace in 9 Years

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June 22nd, 2016

This morning's release of the May Existing-Home Sales increased from the previous month to a seasonally adjusted annual rate of 5.53 million units from a downwardly revised 5.43 million in April. The Investing.com consensus was for 5.54 million. The latest number represents a 1.8% increase from the previous month, it's highest pace in 9 years, and a 4.5% increase year-over-year.

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FHFA House Price Index Up 0.2% in April

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June 22nd, 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 April, up 0.2 percent on a seasonally adjusted basis from the previous month. Year-over-year the index is up 5.9% (nonseasonally adjusted).

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Gasoline Volume Sales and our Changing Culture

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June 21st, 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-April, 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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Weekly Gasoline Price Update: Regular Down a Nickel, Premium Down Four Cents

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June 20th, 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 are down five and four cents, respectively, from last week. According to GasBuddy.com, California has the highest average price for Regular at $2.86 and San Francisco is averaging $3.01. South Carolina has the cheapest at $2.02. The WTIC end of day spot price closed at 49.84 an increase of 0.96 from this time last week.

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Secular Trends in Residential Building Permits and Housing Starts

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June 17th, 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 May Better Than Forecast

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June 17th, 2016

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for May new residential housing starts. The latest reading of 1,164M was above the Investing.com forecast of 1.150M. The April count was revised downward by 5M, but the March count was revised upward by 14M.

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New Residential Building Permits: May Count Rises, But Less Than Forecast

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June 17th, 2016

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for May new residential building permits. The latest reading of 1.138M was an increase over 1.130M in April but below the Investing.com forecast of 1.150M.

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A Long-Term Look at Inflation

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June 16th, 2016

The Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the year-over-year inflation rate at 1.02%. It is substantially below the 3.79% average since the end of the Second World War and its 10-year moving average, now at 1.86%.

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Inflation: An X-Ray View of the Components

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June 16th, 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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Five Decades of Middle Class Wages: May 2016 Update

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June 16th, 2016

We've updated this series to include today's release of the Consumer Price Index as the deflator and the May monthly update. The latest hypothetical annual earnings are at $36,103, down 13.4% from 44 years ago.

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The Big Four Economic Indicators: May Real Retail Sales Up Only 0.2%

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June 16th, 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 May.

Nominal sales rose 0.5% (0.45% to two decimals). Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, rose only 0.2% (0.23% to two decimals) month-over-month. 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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What Inflation Means to You: Inside the Consumer Price Index

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June 16th, 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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NAHB Housing Market Index: Up Two Points

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June 16th, 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 60 was a rise of two points and a point above the Investing.com forecast of 59.

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Philly Fed Manufacturing Index: "Little Growth this Month"

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June 16th, 2016

The latest Manufacturing Index came in at 4.7, up from last month's -1.8. The 3-month moving average came in at 0.4, up down from 3.0 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook was down at 29.8 versus the previous month's 36.1.

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Consumer Price Index: A Small Rise in May Core Inflation

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June 16th, 2016

The Bureau of Labor Statistics released the May CPI data this morning. The year-over-year nonseasonally adjusted Headline CPI came in at 1.02%, down slightly from 1.13% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.24%, up from the previous month's 2.15%.

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The Big Four Economic Indicators: May Industrial Production Disappoints ... Again

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June 15th, 2016

Today's report on Industrial Production for May shows a month-over-month decline of 0.4 percent (0.42 percent to two decimal places), which was worse than the Investing.com consensus of a 0.2 percent decline. The previous month's 0.66 percent decline was revised downward to 0.57 percent. The May data has erased most of the big jump in April. Industrial Production has contracted for 14 of the last 18 months.

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Empire State Manufacturing Expanded Modestly

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June 15th, 2016

This morning we got the latest Empire State Manufacturing Survey. he diffusion index for General Business Conditions at 6.0 (6.01 to two decimals) shows a significant increase from last month's -9.02, and signals improving activity. The Investing.com forecast was for a reading of -4.00.

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Producer Price Index: A Rise in May

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June 15th, 2016

Today's release of the May Producer Price Index (PPI) for Final Demand came in at 0.5% month-over-month seasonally adjusted, up from a revised from 0.2% in April. It is at -2.2% year-over-year, down from -1.3% in the previous month. Core Final Demand (less food and energy) came in at 0.1% MoM, down from 0.2% the previous month but is up 1.6% YoY. The Investing.com forecasts were for 0.3% headline and 0.1% core.

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May Retail Sales Remain Solid

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June 14th, 2016

The Census Bureau's Advance Retail Sales Report released this morning shows that the seasonally adjusted sales series increased in May. Headline sales came in at 0.5% month-over-month (0.45% to two decimal places), which was above the 0.3% increase forecast by Investing.com. Headline sales are up 2.5% year-over-year. Core Retail Sales (ex Autos) came in at 0.4% MoM (0.44% to two decimals), matching the Investing.com forecast.

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NFIB: Small Business Survey Rises Modestly in May

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June 14th, 2016

The latest issue of the NFIB Small Business Economic Trends is out today. The headline number for May came in at 93.8, up 0.2 from the previous month's 93.6. The index is at the 20th percentile in this series. Today's number came in at the Investing.com forecast.

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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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Treasury Yields: A Long-Term Perspective

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June 10th, 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 Philly Fed ADS Business Conditions Index Update

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June 10th, 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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The Q Ratio and Market Valuation: A Revised Update

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June 9th, 2016

Note: This update has been revised to include today's release of the Federal Reserve's Nonfinancial Corporate Business data for Q1.

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

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June 8th, 2016

We've updated our workforce analysis to include last week's Employment Report for May. The unemployment ticked down to 4.7% and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) was at 38K with a number of revisions made for a combined 59K loss.

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Job Openings & Labor Turnover: Clues to the Business Cycle

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June 8th, 2016

The latest JOLTS report (Job Openings and Labor Turnover Summary), data through April, 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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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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Demographic Trends for the 50-and-Older Work Force

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June 7th, 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 S&P 500, Dow and Nasdaq Since Their 2000 Highs

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June 7th, 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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The Latest Look at Long-Term Trends in Employment by Age Group

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June 7th, 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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Multiple Jobholders: Two Decades of Trends as of May

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June 6th, 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 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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June 6th, 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 May Remains Negative, Revisions Made

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June 6th, 2016

With last week's unfavorable jobs report, today's update of the Labor Market Conditions Index takes on special significance. The LMCI is a relatively recent indicator developed by Federal Reserve economists to assess changes in the labor market conditions. Today's release of the May data came in at -4.8, down from a revised -3.4 in April. A number of revisions were made.

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The Big Four Economic Indicators: May Nonfarm Employment

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June 6th, 2016

This commentary has been updated to include Nonfarm Employment for May. As the adjacent thumbnail of the past year illustrates, Nonfarm Employment remains in its upward trend but at a slowing rate. The May report of 38K new jobs was substantially below expectations (Investing.com was looking for 164K). Furthermore, the April and March numbers were revised downward by 59K (37K and 22K, respectively).

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The Civilian Labor Force, Unemployment Claims and the Business Cycle

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June 4th, 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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Market Cap to GDP: An Updated Look at the Buffett Valuation Indicator

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June 3rd, 2016

With last week's release of the Second 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 112.9%, little changed from 113.0% for the Advance Estimate. It is off its 130.9% interim high in Q1 of 2105 year and remains under 2 standard deviations from its mean.

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ISM Non-Manufacturing: PMI Down, Signals Continued Slow Growth

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June 3rd, 2016

Today the Institute for Supply Management published its latest Non-Manufacturing Report. The headline NMI Composite Index is at 52.9 percent, down 2.8 percent from last month's seasonally adjusted 55.7 percent. Today's number came in below the Investing.com forecast of 55.5 percent.

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Secular Trends in Employment: Goods Producing Versus Services Providing

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June 3rd, 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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May New Jobs Plummet, but Unemployment at 8+ Year Low

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June 3rd, 2016

Today's report of 38K new nonfarm jobs in May was drastically lower than the Investing.com forecast of 164K. March and April's nonfarm payrolls were revised downward for a combined 59K loss. The unemployment rate was down, now at 4.7% and its lowest since November of 2007.

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April Trade Deficit Up 1.9B from Revised March

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June 3rd, 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 Remains Overvalued, Down Slightly from Last Month

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June 2nd, 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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June 2nd, 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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A Closer Look at the This Morning's ADP Employment Report

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June 2nd, 2016

In this morning's ADP employment report we got the May estimate of 173K new nonfarm private employment jobs, an increase from April's 166K, which was an upward revision from 156K. Also, the March number was revised upward from 194K to 201K. 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 May Employment Data: 173K New Nonfarm Private Jobs

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June 2nd, 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 May estimate of 173K new nonfarm private employment jobs from ADP, an increase from April's 166K, which was an upward revision from 156K.

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Two Measures of Inflation and Fed Policy

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June 2nd, 2016

The BEA's Personal Consumption Expenditures Chain-type Price Index for April, released yesterday, shows that core remains inflation below the Federal Reserve's 2% long-term target at 1.60%, The latest YoY Core PCE index (less Food and Energy) came in at 1.60%, virtually changed from the previous month's upwardly revised 1.59% but 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 April, is higher at 2.15%. The Fed is on record as using Core PCE data for its primary inflation gauge.

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Regional Fed Manufacturing Overview: May Continues Climb

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June 1st, 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 May is -1.2, up from last month's -3.2.

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Is the Stock Market Cheap?

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June 1st, 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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A Perspective on Secular Bull and Bear Markets

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June 1st, 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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NYSE Margin Debt Increased Again in April

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June 1st, 2016

Note: The NYSE has released new data for margin debt, now available through April. 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 up 2.2% month-over-month, the second month of increase off its interim low in February, but this metric remains well below its record high set in April of last year.

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Crestmont Market Valuation Update

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June 1st, 2016

Quick take: Based on the May S&P 500 average of daily closes, the Crestmont P/E is 88% above its arithmetic mean and at the 97th percentile of this fourteen-plus-decade monthly metric.

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ISM Manufacturing Index: Expansion in May for Third Consecutive Month

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June 1st, 2016

Today the Institute for Supply Management published its monthly Manufacturing Report for May. The latest headline PMI was 51.3 percent, an increase of 0.5 percent from the previous month and above the Investing.com forecast of 50.4.

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Minimal Change in the April PCE Price Index

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June 1st, 2016

The Personal Income and Outlays report for April was published yesterday by the Bureau of Economic Analysis. The latest Headline PCE price index year-over-year (YoY) rate is 1.09%, up from the previous month's upwardly revised 0.85%. The latest YoY Core PCE index (less Food and Energy) came in at 1.60%, virtually changed from the previous month's upwardly revised 1.59%.

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

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June 1st, 2016

Quick take: At the end of May the inflation-adjusted S&P 500 index price was 81% above its long-term trend, down slightly from 83% 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: May Month-End Update

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May 31st, 2016

Valid until the market close on June 30, 2016

The S&P 500 closed May with a monthly gain of 1.53% after a gain of 0.27% 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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Home Prices Rose 5.1% Year-over-Year in March

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May 31st, 2016

With today's release of the March S&P/Case-Shiller Home Price we learned that seasonally adjusted home prices for the benchmark 20-city index were up 0.9% month over month. The seasonally adjusted year-over-year change has hovered between 4.3% and 5.3% for the last twelve months.

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Dallas Fed Manufacturing Outlook: Factory Activity Declined in May

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May 31st, 2016

This morning the Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for May. The latest general business activity index declined in May after two months of increases. The General Activity index came in at -20.8, down from -13.9 in April.

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Consumer Confidence Declined Further in May

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May 31st, 2016

The latest Conference Board Consumer Confidence Index was released this morning based on data collected through May 19. The headline number of 92.6, was a decrease from the April final reading of 94.7, which is an upward revision from 94.2. Today's number was below the Investing.com forecast of 96.0.

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Chicago PMI Contracts in May

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May 31st, 2016

The latest Chicago Purchasing Manager's Index, or the Chicago Business Barometer, decreased again in May to a value of 49.3 from last month's 50.4. Values lower than 50.0 indicate contracting manufacturing activity.

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April Real Disposable Income Per Capita Rises Again

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May 31st, 2016

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

At two decimal places, the nominal 0.40% month-over-month increase in disposable income comes in at 0.10% when we adjust for inflation. The year-over-year metrics are 3.62% nominal and 2.50% real.

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The Big Four Economic Indicators: Real Personal Income for April

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May 31st, 2016

Personal Income (excluding Transfer Receipts) in April rose 0.44% and is up 4.5% year-over-year. When we adjust for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) rose 0.13%. The real number is up 3.4% year-over-year. Real PI less TR is one of those indicators that warrants adjustment for population growth to understand the long-term trends.

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Moving Averages: Month-End Preview

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May 27th, 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. All five Ivy Portfolio ETFs — Vanguard Total Stock Market ETF (VTI),Vanguard FTSE All-World (VEU), iShares' Barclays 7-10 Year Treasury (IEF), PowerShares DB (DBC) and Vanguard REIT Index ETF (VNQ), — are signaling "invested", unchanged from last month's triple invested signal.

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Visualizing GDP: An Inside Look at the Q1 Second Estimate

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May 27th, 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 Second Estimate Back in Positive Territory

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May 27th, 2016

The Second Estimate for Q1 GDP, to one decimal, came in at 0.8 percent, up from the the 0.5 percent of Advance Estimate. With a per-capita adjustment, the data series is currently back in positive territory at 0.16 percent. The 10-year moving average illustrates that US economic growth has slowed dramatically since the last recession.

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Q1 GDP Second Estimate a Slight Disappointment at 0.8 Percent

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May 27th, 2016

The Second Estimate for Q1 GDP, to one decimal, came in at 0.8 percent, up from 0.5 percent in last month's Advance Estimate. Today's number was a bit below most mainstream estimates, with Investing.com forecasting 0.9 percent and the Briefing.com consensus also at 0.9 percent.

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Pending Home Sales "Lift Off" in April, Highest in Over a Decade

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May 26th, 2016

Today the National Association of Realtors released the April data for their Pending Home Sales Index. According to the National Association of Realtors®, "Pending home sales rose for the third consecutive month in April and reached their highest level in over a decade. All major regions saw gains in contract activity last month except for the Midwest, which saw a meager decline."

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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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Richmond Fed: Manufacturing Slows in May

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May 24th, 2016

Today the Richmond Fed Manufacturing Composite Index fell 15 points to -1 from last month's 14. Investing.com had forecast 9.0. Because of the highly volatile nature of this index, we include a 3-month moving average to facilitate the identification of trends, now at 11.7, indicating expansion.

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Treasury Snapshot: Approaching Five Months Since the Fed's December Rate Hike

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May 13th, 2016

Let's take a closer look at US Treasuries since the Fed's December rate hike decision, the first increase in a decade. The yield on the 10-year note ended the day today at 1.71%, which is at the low end of the year-to-date range of 1.63% to 2.25%. The yield on the 2-year note closed today at 0.76%, well below its 1.09% interim high set the last week of 2015.

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

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May 3rd, 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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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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