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dshort – Advisor Perspectives

Weekly Gasoline Price Update: Down a Penny

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June 29th, 2015

It's time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium each went down by two cents from last week. According to GasBuddy.com, California has the highest average price for Regular at $3.44, and its averaging $3.56 in Los Angeles. South Carolina has the cheapest at $2.43.

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S&P 500 Snapshot: Biggest One-Day Selloff Since February 2014

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June 29th, 2015

The world markets have finally registered a wake-up call with the latest move in the Greece financial crisis. The S&P 500 plunged in the opening minutes and then sold off at a steady pace to its -2.09% close, just fractionally off its -2.14% intraday low in the closing minutes. This is the biggest one-day selloff since the -2.28% nosedive on February 3rd of last year. The index is now in the red year-to-date.

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Moving Averages: Month-End Preview

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June 29th, 2015

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 open on the last day of the month, all three S&P 500 strategies are signaling "invested" -- unchanged from last month. Three of the five Ivy Portfolio ETFs - iShares Barclays 7-10 Year Treasury (IEF),Vanguary REIT Index ETF (VNQ), and PowerShares DB Commodity Index Tracking (DBC) - are signaling "cash", compared with last month's single DBC cash signal.

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Dallas Fed Manufacturing Outlook Rose but Remains in Negative Territory

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June 29th, 2015

This morning we got the most recent Dallas Fed Manufacturing Outlook. The latest index came in at -7.0, the highest reading since January. The Investing.com forecast was for a reading of -11.5.

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World Markets Weekend Update: The Shanghai Selloff Continues

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June 27th, 2015

The top performers in our world market focus group over the past week were the two Eurozone indexes. France's CAC 40 rose an impressive 5.06%, and Germany's DAXK was up 4.10%, both bouncing back a bit from the European selling associated with the ongoing and rather tedious Grexit drama. But the bigger international story is the mounting evidence of the Shanghai Bubble. The benchmark Shanghai Composite dropped another 6.37%, following up on its 13.32% plunge the previous week.

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Treasury Snapshot: 30-year Yield at its 2015 high

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June 26th, 2015

US Equity indexes have had a relatively dull week with little volatility. Treasury yields have provided market watcher a bit more drama. The yield on the benchmark 10 year note closed last week at 2.26%. This week's close was 23 bps higher at 2.49%, which is a single bp below the 2015 closing high on June 10th. The 30-year bond yield closed the week at its 2015 high of 3.25%.

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Treasury Yields in Perspective

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June 26th, 2015

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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ECRI Weekly Leading Index: Little to No Change

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June 26th, 2015

ECRI's most recent article suggests that wage inflation does not support the case for a rate increase. "The recent rise in wage inflation, having become an obvious fact, is increasingly being used to support the case for rate hikes – including by Fed Chairman Janet Yellen, who now sees these “tentative signs of stronger wage growth” as a harbinger of inflation."

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Michigan Consumer Sentiment: Growth in Consumer Spending 3% in 2015

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June 26th, 2015

The University of Michigan final Consumer Sentiment for June came in at 96.1, a small increase from the 94.6 June preliminary final reading but still below the interim high of 98.1 in January. Investing.com had forecast 94.6 for the June final. The latest survey findings were a welcome improvement following last month's interim low.

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Two Measures of Inflation and Fed Policy

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June 25th, 2015

The BEA's Personal Consumption Expenditures Chain-type Price Index for May shows core inflation below the Federal Reserve's 2% long-term target at 1.24%. The latest Core Consumer Price Index release, also data through May, is higher at 1.72%. The Fed is on record as using Core PCE data for its primary inflation gauge.

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Kansas City Fed Survey: Manufacturing at Levels Last Seen in Mid-2009

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June 25th, 2015

We have added the Kansas City Fed Manufacturing Survey to our series of regional Fed updates and using the composite index. This business conditions indicator measures activity in the following states: Colorado, Kansas, Nebraska, Oklahoma, Wyoming, western Missouri, and northern New Mexico. The latest index came in at -9, which indicates slowing activity. Here is a snapshot of the complete Kansas City Fed Manufacturing Survey. The three-month moving average, which helps us visualize trends, is at its lowest level since mid-2009.

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May Real Disposable Income Per Capita Rose a Fractional 0.12%

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June 25th, 2015

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.

The May nominal 0.43% month-over-month increase in disposable income drops to 0.12% when we adjust for inflation. The year-over-year metrics are 3.00% nominal and 2.77% real.

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The Big Four Economic Indicators: Real Personal Income

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June 25th, 2015

Personal Income (excluding Transfer Receipts) in May rose 0.61% and is up 4.3% year-over-year. When we adjust for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) rose 0.30%. The real number is up 4.07% year-over-year. Real PI less TR is one of those indicators that warrants adjustment for population growth.

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Last Week's New Jobless Claims Were Close to Expectations

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June 25th, 2015

Today's seasonally adjusted 271K new claims was a close approximation to the Investing.com forecast of 272K. The four-week moving average at 273,750, is 7K above the 15-year interim low set in mid-May.

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The PCE Price Index Remains Disappointingly Below Target

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June 25th, 2015

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 0.22%, little changed from 0.16% the previous month. The latest Core PCE index (less Food and Energy) at 1.24% is a slight decline from the previous month's 1.29% YoY.

The adjacent thumbnail gives us a close-up of the trend in YoY Core PCE since January 2012.

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Vehicle Miles Traveled: A New Look at Our Evolving Behavior

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June 25th, 2015

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 3.9% (10.2 billion vehicle miles) for April 2015 as compared with April 2014." The less volatile 12-month moving average is up 0.33% month-over-month and 2.78% year-over-year. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) is a smaller change, up 0.26% month-over-month and up only 1.62% year-over-year.

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Q1 GDP Per Capita at -1.1 for Third Estimate

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June 24th, 2015

The Third Estimate for Q1 GDP, to one decimal, came in at -0.2 percent, a 0.5 increase from the -0.7 percent of the Second Estimate. But with a per-capita adjustment, the data series is currently at -1.1 percent (-1.08 percent to two decimal places). The 10-year moving average illustrates that US economic growth has slowed dramatically since the last recession.

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Visualizing GDP: A Look Inside the Q1 Third Estimate

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June 24th, 2015

The chart below 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 Third Estimate Goes Less Negative

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June 24th, 2015

The Third Estimate for Q1 GDP, to one decimal, came in at -0.2 percent, an increase from the -0.7 percent of the Advance Estimate. Today's number was not a surprise, as both Investing.com and Briefing.com had a forecast of -0.2.

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The "Real" Goods on the May Durable Goods Data

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June 23rd, 2015

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 below 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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New Homes Sales Highest Since February 2008

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June 23rd, 2015

This morning's release of the May New Homes Sales from the Census Bureau at 546K was 21K above forecast, with the previous month an upward revision. The Investing.com forecast was for 525K sales, which would have been a 3.8% increase from the revised previous month. The actual increase was 2.2%.

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Richmond Fed: Manufacturing Grew Modestly in June

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June 23rd, 2015

Today the Richmond Fed Manufacturing Composite Index increased slightly with a 5 point increase to 6 from last month's 1. Investing.com had forecast a rise to 3. Because of the highly volatile nature of this index, we include a 3-month moving average to facilitate the identification of trends, now at 1.3, in modest contraction.

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May Durable Goods: Another Mixed Bag

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June 23rd, 2015

The latest new orders headline number at -1.8 percent was well below the Investing.com estimate of -0.6 percent. This series is down -2.5 percent year-over-year (YoY). If we exclude transportation, "core" durable goods came in at 0.5 percent month-over-month (MoM), a tick below the Investing.com estimate of 0.6 percent. The core measure is down -1.6 percent YoY. If we exclude both transportation and defense for an even more fundamental "core", the latest number was a fractional up 0.2 percent MoM, but down -1.1 percent YoY.

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Gasoline Volume Sales and our Changing Culture

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June 22nd, 2015

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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Understanding the CFNAI Components

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June 22nd, 2015

The Chicago Fed's National Activity Index, which we reported on earlier today, 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 Bounce Back in May

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June 22nd, 2015

This morning's release of the May Existing-Home Sales surprised expectations, bouncing back to a seasonally adjusted annual rate of 5.35 million units from an upwardly revised 5.09 million in April (previously 5.04 million). The Investing.com consensus was for 5.26 million. The latest number represents a 5.1% increase from the previous month and a 9.2% increase year-over-year.

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Chicago Fed: Economic Growth Slightly Below Average in May

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June 22nd, 2015

"Index shows economic growth slightly below average in May": This is the headline for today's release of the Chicago Fed's National Activity Index, and here are the opening paragraphs from the report:

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A Long-Term Look at Inflation

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June 18th, 2015

The Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the year-over-year inflation rate at -0.04%. It is substantially below the 3.84% average since the end of the Second World War and its 10-year moving average, now at 2.16%.

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Inflation: A Six-Month X-Ray View

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June 18th, 2015

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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Philly Fed Business Outlook: Surprising 8.5 Point Jump Indicating Expansion

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June 18th, 2015

The latest gauge of General Activity came in at 6.7, down from last month's 7.5. The 3-month moving average came in at 15.2, up from 6.79 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook was up at 39.7, versus the previous month's 33.9.

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Conference Board Leading Economic Index Increased Again in May

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June 18th, 2015

The Latest Conference Board Leading Economic Index (LEI) for May is now available. The index rose 0.7 percent, which follows a 0.7 percent April increase. The latest indicator value came in above the 0.4 percent forecast by Investing.com.

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What Inflation Means to You: A Look Inside the Consumer Price Index

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June 18th, 2015

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 below illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U, which I'll refer to hereafter as the CPI.

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The Big Four Economic Indicators: Real Retail Sales

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June 18th, 2015

Retail Sales in May rose 1.21%, the third month of growth following three months of contraction. The seasonally adjusted Consumer Price Index puts May Real Retail Sales at a reduced 0.76% month-over-month. The chart below 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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May Consumer Price Index Year-over-Year: Flat Headline Inflation, Core at 1.7%

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June 18th, 2015

The Bureau of Labor Statistics released the May CPI data this morning. The year-over-year unadjusted Headline CPI came in at -0.04% (rounded to 0.0%), up from -0.20% (rounded to -0.2%) the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.72% (rounded to 1.7%), down from the previous month's 1.81% (rounded to 1.8%).

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GDP Forecasts: The Latest from the WSJ Economists and the Fed

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June 17th, 2015

Earlier this month the Wall Street Journal did its monthly survey of economists on a variety of economic metrics, including of course GDP. Sixty-six of the 72 economists solicited participated. Here is a look at the range of forecasts for 2015 annual GDP. We've calculated the median (middle), mean (average) and mode (most frequent). We've also documented the range of Fed forecasts in today's projections.

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Secular Trends in New Residential Building Permits and Housing Starts

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June 17th, 2015

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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WSJ Economists' June Forecasts for 10-Year Yields and the Fed Funds Rate

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June 17th, 2015

This afternoon the Fed will release the FOMC Minutes for its May meeting followed by Chair Yellen's press conference. In advance of the Fed information, let's take a quick look at a couple of items in the June Wall Street Journal survey of economists, starting with where the Federal Reserve is headed with the Fed Funds Rate, which is currently holding steady at 13 percent.

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New Residential Building Permits Highest Since August 2007

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June 16th, 2015

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 1.275M was well above the Investing.com forecast of 1.100M.

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New Residential Housing Starts Below Forecast for May

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June 16th, 2015

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 1.036M was below the Investing.com forecast of 1.10M.

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NAHB Housing Market Index: Highest Since September 2014

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June 15th, 2015

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.

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The Big Four Economic Indicators: Industrial Production

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June 15th, 2015

Today's report on Industrial Production for May shows a month-over-month decrease of -0.2 percent (-0.17 percent to two decimal places), which is well below the Investing.com consensus of a 0.3 percent increase. The indicator is up only 1.37% year-over-year, its lowest YoY reading since January 2010. Industrial Production is now 1.12 percent off its interim high in December.

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Empire State Manufacturing Conditions Worsen Marginally

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June 15th, 2015

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at -2.0 (-1.98 to two decimals) shows an increase from last month's 3.9, which signals a slight decline in activity. The Investing.com forecast was for a reading of 6.0.

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Producer Price Index Remains Negative Year-over-Year

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June 12th, 2015

Today's release of the May Producer Price Index (PPI) for Final Demand came in at 0.5% month-over-month seasonally adjusted. That follows the previous month's -0.4% decline. Core Final Demand (less food and energy) came in at 0.1% month-over-month following a -0.2% change the month before. The Investing.com forecasts were for 0.4% headline and 0.1% core. The year-over-year change in seasonally adjusted Final Demand is -1.0%, the second lowest in the brief history of this data series, the lowest being the -1.3% in April.

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The Q Ratio and Market Valuation: Monthly Update

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June 11th, 2015

Note: This commentary has been updated to incorporate today's release of the Federal Reserve's Z.1. Financial Accounts of the United States for Q1 2015 for the latest Q Ratio.

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 11th, 2015

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 that is 54.5% above the 2009 trough and 25.2% above the 2007 peak and at an all-time high. The nominal Q1 net worth is up 2.0% from the previous quarter and up 5.7% year over year.

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The Fed Balance Sheet: What Is Uncle Sam's Largest Asset?

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June 11th, 2015

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

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

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May Retail Sales: Finally Some Evidence of a Spring Bounce

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June 11th, 2015

The Census Bureau's Advance Retail Sales Report released this morning shows that seasonally adjusted sales in May were up 1.2% month-over-month and 2.7% year-over-year. Core Retail Sales (ex Autos) came in at 1.0% MoM and 1.3% YoY. The Investing.com forecasts were 1.1% for Headline Sales and 0.7% for Core Sales. Today's report now provides some evidence for the nervously awaited bounce in personal consumption.

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The Numbers Needed for the Prime U.S. Workforce to Recover

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June 10th, 2015

At last year's Jackson Hole Symposium, Fed Chair Janet Yellen delivered an extended analysis of "Labor Market Dynamics and Monetary Policy". Her speech essentially reviewed the ongoing debate over the mix of cyclical versus structural factors in employment since the Great Recession.

Here is an updated series of charts illustrating some structural changes in the workforce that are far more significant than the cyclical impact of the Great Recession.

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Demographic Trends in the 50-and-Older Work Force

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June 9th, 2015

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 almost one in five of the 70-74 cohort are in the labor force.

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Long-Term Trends in Employment by Age Group

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June 9th, 2015

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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Job Openings & Labor Turnover: Clues to the Business Cycle

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June 9th, 2015

The latest JOLTS report (Job Openings and Labor Turnover Summary), data through April, is now available. The first chart below shows four of the headline components of the overall series, which the BLS began tracking in December 2000. The timeframe 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. Nevertheless, there are some clear JOLTS correlations with the most recent business cycle trends.

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Small Business Optimism Rises, Best Reading Since December

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June 9th, 2015

The latest issue of the NFIB Small Business Economic Trends is out today. The update for May came in at 98.3, a 1.4 point increase from the previous month. The index is now at the 39th percentile in this series. The Investing.com forecast was for 97.1. Here is the opening summary of the news release.

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Inside the World of Multiple Jobholders: Two Decades of Trends

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June 8th, 2015

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 I've illustrated in a pie chart.

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

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June 8th, 2015

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 Shows Weak Expansion

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June 8th, 2015

The Labor Market Conditions Index (LMCI) is a relatively recent indicator developed by Federal Reserve economists to assess changes in the labor market conditions. It is a dynamic factor model of labor market indicators, essentially a diffusion index subject to extensive revisions based on nineteen underlying indicators in nine broad categories (see the table at the bottom for details). Today's release of the May data indicates weak expansion at 1.3. The April value was revised upward from -1.9 to -0.5.

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The Civilian Labor Force, Unemployment Claims and the Business Cycle

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June 5th, 2015

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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The Big Four Economic Indicators: Nonfarm Employment

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June 5th, 2015

The US economy has been slow in recovering from the Great Recession. Weak Retail Sales and Industrial Production in recent months have triggered a replay of the "severe winter" meme from last year. However, we're now getting data points for Spring months, not the Winter. Employment and Income have been relatively strong, and the May Employment numbers continue its positive trend. However, the data shows us that two of the four indicators have contracted for the previous five months.

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May Jobs Growth Surprises and the Unemployment Rate at 5.5%

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June 5th, 2015

Today's report of 280K new nonfarm jobs in May was much better than the Investing.com forecast of 225K. Moreover, April nonfarm payrolls were revised downward by 2K from 223K to 221K. The unemployment rate ticked back up to 5.5%.

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The Latest Philly Fed ADS Business Conditions Index

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June 4th, 2015

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 Market Remains in Overvaluation Territory

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June 3rd, 2015

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: More Clues from the Past

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June 3rd, 2015

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: Continued Growth in May, but at a Slower Rate

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June 3rd, 2015

Today the Institute for Supply Management published its latest Non-Manufacturing Report. The headline NMI Composite Index is at 55.7 percent, down 2.1% percent from last month's 57.8 percent. Today's number came in above the Investing.com forecast of 56.2 percent.

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Anticipating the Employment Report for May

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June 3rd, 2015

The economic mover and shaker this week is the Friday employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, probably the most publicized in the near term being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository).

Today we have the May estimate of 201K new nonfarm private employment jobs from ADP, a welcome rebound from the previous month's 165K, which is a downward revision from 169K.

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Light Vehicle Sales Per Capita: Understanding the Long-Term Trend

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June 2nd, 2015

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 61.7%.

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Crestmont Market Valuation Update

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June 2nd, 2015

Quick take: Based on the May S&P 500 average of daily closes, the Crestmont P/E is 99% above its arithmetic mean and at the 98th percentile of this fourteen-plus-decade monthly metric.

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Is the Stock Market Cheap?

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June 2nd, 2015

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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Regression to Trend: A Perspective on Long-Term Market Performance

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June 2nd, 2015

Quick take: At the end of Maythe inflation-adjusted S&P 500 index price was 94% above its long-term trend, unchanged from 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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ISM Manufacturing Index: Growth of 1.3%

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June 1st, 2015

Today the Institute for Supply Management published its monthly Manufacturing Report for May. The latest headline PMI was 52.8 percent, a 1.3% increase from the previous month and slightly above the Investing.com forecast of 52.0. The indicator remains at the lowest PMI since May 2013.

Here is the key analysis from the report:

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Secular Bull and Bear Markets

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June 1st, 2015

Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? At this point, six 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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The S&P 500, Dow and Nasdaq Since Their 2000 Highs

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May 31st, 2015

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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Moving Averages: May Month-End Update

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May 29th, 2015

Valid until the market close on June 30, 2015

The S&P 500 closed May with a monthly gain of 1.05%. All three S&P 500 MAs and three of the 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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NYSE Margin Debt Hits a New Record High

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May 29th, 2015

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 latest debt level is up 6.5% month-over-month and at a record high. Real (inflation-adjusted) debt rose 6.24% month-over-month and also at a record high.

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Market Cap to GDP: A New Interim High for the Buffett Valuation Indicator

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May 29th, 2015

This commentary has an updated denominator from the Second Estimate of Q1 GDP. The numerator is a linear extrapolation of the Fed's "Corporate Equities; Liability" in the Q4 Z.1 Financial Accounts. The indicator remains over 2 standard deviations above its mean at an interim high of 132.3%.

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The Median Household Income Rose in April

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May 28th, 2015

The Sentier Research monthly median household income data series is now available for April. The nominal median household income was up $375 month-over-month and up $1,549 year-over-year. That's a 0.7% MoM increase and 2.9% YoY. Adjusted for inflation, the latest income was up $309 MoM and $1,606 YoY. The real numbers equate to a 0.6% MoM increase and a 3.0% YoY. In real dollar terms, the median annual income is 4.7% lower ($2,703) than its interim high in January 2008 but well off its low in August 2011.

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Forecasting Q1 Second Estimate GDP: Gazing Into the Crystal Ball

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May 27th, 2015

The big economic number this week will be the Q1 Second Estimate for GDP on Friday at 8:30 AM ET. With the BEA's Advance Estimate of 0.2% behind us, what do economists see in their collective crystal ball for Q1 of 2015? Let's take a look at the latest GDP forecasts from the latest Wall Street Journal survey of economists conducted earlier this month.

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A Modest Improvement in Consumer Confidence

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May 26th, 2015

The Latest Conference Board Consumer Confidence Index was released this morning based on data collected through May 15. The headline number of 95.4 was a small increase from the revised April final reading of 94.3, a downward revision from 95.2. Today's number was slightly below the Investing.com forecast of 94.9.

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A New Look at the Total Return Roller Coaster

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May 20th, 2015

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 $18,300 for an annualized real return of 12.15%.

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Labor Productivity, Household Incomes and Corporate Profits: And the Winner Is?

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May 7th, 2015

Yesterday the Bureau of Labor Statistics released the preliminary data for Q1 Productivity and Costs. We learned that the headline metric, nonfarm business sector labor productivity, decreased at a 1.9 percent annual rate during the first quarter of 2015. Let's take a look at the BLS's complete data series for this index, which dates from 1947.

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Four Bad Bears: Some Comments from Bob Bronson

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April 22nd, 2015

Earlier today I received an email from my friend Bob Bronson of Bronson Capital Markets Research. Bob offered some comments on the latest update in my periodic overview of bear market recoveries:

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The Four Totally Bad Bear Recoveries: Where Are We Now?

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April 20th, 2015

This chart series features an overlay of the Four Bad Bears in U.S. history since the 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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The Declining Demand for Driving Vehicles

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March 20th, 2015

Paul Hodges, who writes a blog for ICIS.com on Chemicals and the Economy, recently sent me link to his fascinating study on the correlation between gasoline prices and the Department of Transportation's monthly statistics on vehicle miles driven. Paul offers a new perspective with a scatter chart showing the correlation between gasoline prices (vertical axis) and per-capita vehicle miles traveled on the horizontal axis.

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Household Income versus Family (Tax-Unit) Income

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January 29th, 2015

My virtual acquaintance New Deal Democrat has posted an interesting article on real (inflation-adjusted incomes) based on annual IRS tax data through 2013. His discussion includes some comparisons between the Census Bureau's median Household Income data and the Family Unit average income. A Family Unit is the term used for an IRS designated Tax Unit (e.g., a couple with dependents, or a head of household with dependents, or a single person).

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Household Incomes Across Time: The Divergence at the Top

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December 30th, 2014

Among the most interesting of the long-term economic indicators I track is the Census Bureau's annual data on the mean (average) household income received by each fifth (quintile) and top 5 percent. See my 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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Happiness Revisited: A Household Income of $75K?

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September 25th, 2014

Note from dshort: I've updated this commentary in the wake of the Census Bureau's release last week of the 2013 annual household income data from the Current Population Survey.

One of my favorite discussions on APViewpoint, which addressed "The Sad State of Happiness" included an indirect reference to a popular 2010 academic study by psychologist Daniel Kahneman and economist Angus Deaton. Their topic was the correlation between annual household income and day-to-day contentment.

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

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September 19th, 2014

The Census Bureau's annual household income reports for 2013 were published this week. I'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 2013. The details are fascinating, if somewhat sobering.

First, some context. The median US income in 2013 was $51,939, up from $22,415 in 1984 -- a 131.7% rise over the 29-year timeframe.

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Median Household Incomes by Age Bracket: 1967-2013

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September 17th, 2014

Earlier today I updated my commentary on household income distribution to include the Census Bureau's release of the 2013 annual data. My 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.

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U.S. Household Incomes: A 46-Year Perspective

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September 17th, 2014

The Census Bureau has now released its annual report household income data for 2013. It is posted on the Census Bureau website. What I'm featuring in this update is an analysis of the quintile breakdown of data from 1967 through 2013 along with the statistics for the top 5%.

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Median Household Income Growth: Deflating the American Dream

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September 16th, 2014

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: 2013. Last year the median (middle) household income was $51,939 -- a 1.8% year-over-year increase that shrinks to 0.3% when adjusted for inflation. Let's put the new release into a larger historical context.

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