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dshort – Advisor Perspectives

S&P 500 Snapshot: Selloff Day Three

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August 4th, 2015

The S&P 500 ended the day with a modest -0.22% decline, the third consecutive day of modest declines. Today was fairly light on economic data in advance of the big event on Friday, the July Employment Report. We did get the Census Bureau's Preliminary Report on Manufacturers’ Shipments, Inventories and Orders, which gives us a revised look at the Advance Report on Durable Goods issued last week. Particularly striking is the -7.1% year-over-year decline in Core Capital Goods.

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The Market Remains in Overvaluation Territory

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August 4th, 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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August 4th, 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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June Durable Goods: A Revised Update

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August 4th, 2015

The Preliminary Report on Manufacturers’ Shipments, Inventories and Orders released today gives us a revised look at the Advance Report on Durable Goods. This update has more extensive data on factory orders. The latest new orders headline number remains at 3.4% percent. This series is down -3.0 percent year-over-year (YoY), a slight downward revision. If we exclude transportation, "core" durable goods came in at 0.6 percent month-over-month (MoM), a bit above the Investing.com estimate of 0.5 percent. However, the core measure is down -4.9 percent YoY, another downward revision.

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Weekly Gasoline Price Update: Regular and Premium Drop Again

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August 3rd, 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 dropped six and five cents respectively again from last week. According to GasBuddy.com, California has the highest average price for Regular at $3.73 with Los Angeles averaging $4.00. South Carolina has the cheapest at $2.25.

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Light Vehicle Sales Per Capita: A New Look at the Long-Term Trend

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August 3rd, 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 62%.

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The Q Ratio and Market Valuation: June Update

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August 3rd, 2015

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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Two Measures of Inflation and Fed Policy

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August 3rd, 2015

The BEA's Personal Consumption Expenditures Chain-type Price Index for June shows core inflation below the Federal Reserve's 2% long-term target at 1.29%. The latest Core Consumer Price Index release, also data through June, is higher at 1.76%. The Fed is on record as using Core PCE data for its primary inflation gauge.

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Crestmont Market Valuation Update

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August 3rd, 2015

Quick take: Based on the July S&P 500 average of daily closes, the Crestmont P/E is 96% above its arithmetic mean and at the 98th percentile of this fourteen-plus-decade monthly metric.

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Regional Fed Manufacturing Overview

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August 3rd, 2015

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. Here we introduce an overview of all five with an overlay and average of historical data.

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Is the Stock Market Cheap?

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August 3rd, 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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June Real Disposable Income Per Capita Rose a Fractional 0.16%

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August 3rd, 2015

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

The June nominal 0.39% month-over-month increase in disposable income drops to 0.16% when we adjust for inflation. The year-over-year metrics are 2.61% nominal and 2.28% real.

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The Big Four Economic Indicators: Real Personal Income for June

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August 3rd, 2015

Personal Income (excluding Transfer Receipts) in June rose 0.47% and is up 3.9% year-over-year. When we adjust for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) rose 0.24%. The real number is up 3.55% year-over-year. Real PI less TR is one of those indicators that warrants adjustment for population growth.

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ISM Manufacturing Index: 31st Consecutive Month of Expansion

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August 3rd, 2015

Today the Institute for Supply Management published its monthly Manufacturing Report for July. The latest headline PMI was 52.7 percent, a decrease of 0.8% from the previous month and below the Investing.com forecast of 54.7. This was the 31st consecutive month of expansion.

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The PCE Price Index Still Remains Disappointingly Below Target

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August 3rd, 2015

The Personal Income and Outlays report for June was published this morning by the Bureau of Economic Analysis. The latest Headline PCE price index year-over-year (YoY) rate is 0.23%, down from a revised 0.31% the previous month. The latest Core PCE index (less Food and Energy) at 1.29% is essentially unchanged from the previous month's 1.27% YoY.

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

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Regression to Trend: A Look at Long-Term Market Performance

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August 3rd, 2015

Quick take: At the end of July the inflation-adjusted S&P 500 index price was 90% above its long-term trend, a slight decline 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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Secular Bull and Bear Markets

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August 2nd, 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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World Markets Weekend Update: Another Shanghai Nosedive

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August 1st, 2015

Five of the eight indexes on our world watch finished in the green this week, although India's SENSEX was up only 0.01% and Japan's Nikkei 0.20%. The UK's FTSE 100 was the top performer with a 1.77% advance. This was the first top finish for the FTSE so far this year. The Shanghai was by far the worst performance, down an even 10% for the week.

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Moving Averages: July Month-End Update

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July 31st, 2015

Valid until the market close on July 31, 2015

The S&P 500 closed July with a monthly gain of 1.98%. 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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Michigan Consumer Sentiment: Small Decline but Still Positive Trend

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July 31st, 2015

The University of Michigan Final Consumer Sentiment for July came in at 93.1, a decrease from the 96.1 June final reading. Investing.com had forecast 94.0 for the July Final. The Index is at its highest eight month average since 2004.

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ECRI Weekly Leading Index: Up Slightly from Last Week

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July 31st, 2015

ECRI continues to feature an article posted on July 15th suggesting that concern over negative trend growth is no reason to panic. Recession is not imminent as we are not yet in a "window of vulnerability." The article also discusses Spain's recent cyclical upturn and warns that one shouldn't assume that a cyclical upturn also means positive long-term trend growth. The overall message is not to "fret about recession just yet".

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Moving Averages: Month-End Preview

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July 30th, 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. Four of the five Ivy Portfolio ETFs - iShares Barclays 7-10 Year Treasury (IEF),Vanguard REIT Index ETF (VNQ), PowerShares DB Commodity Index Tracking (DBC), and Vanguard FTSE All-World ex-US ETF (VEU) - are signaling "cash", compared with last month's triple cash signal (IEF, VNQ, DBC).

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Market Cap to GDP: The Buffett Valuation Indicator Remains in Levitation Mode

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July 30th, 2015

With today's release of the Advance Estimate for Q2 GDP along with revisions for the previous 12 quarters, we now have a fresh look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The latest data keeps the indicator in levitation mode at a new interim high.

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Q2 GDP Per Capita at 1.7 for Advance Estimate

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July 30th, 2015

The Advance Estimate for Q2 GDP, to one decimal, came in at 2.3 percent, up from the 0.6 percent of Q1, which is an upward revision from -0.2 percent prior to today's annual revisions.. But with a per-capita adjustment, the data series is currently at 1.7 percent (1.66 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 Q2 Advance Estimate

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July 30th, 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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New Jobless Claims Up 12K

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July 30th, 2015

Today's seasonally adjusted 267K new claims was slightly better than the Investing.com forecast of 270K. The four-week moving average at 274,750 is just over 8K above the 15-year interim low set in mid-May.

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Q2 GDP Advance Estimate at 2.3%, Close to Mainstream Forecasts

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July 30th, 2015

The Advance Estimate for Q2 GDP, to one decimal, came in at 2.3 percent, a substantial increase from the 0.6 percent of Q1, which is an upward revision from -0.2 percent prior to today's annual revisions. Today's number came in a tad on the light side of most mainstream estimates. The WSJ survey of economists had median and mean forecasts of 2.6 and 2.7, respectively. Investing.com was looking for 2.6.

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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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June Pending Home Sales Snap a Five-Month String of Increases

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July 29th, 2015

Earlier today the National Association of Realtors released the June data for their Pending Home Sales Index. The NAR reports that "after five consecutive months of increases, pending home sales slipped in June but remained near May’s level, the highest in over nine years." The adjacent chart gives us a snapshot of the index since 2001.

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Consumer Confidence Drops Nine Points

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July 28th, 2015

The latest Conference Board Consumer Confidence Index was released this morning based on data collected through July 16. The headline number of 90.9 was a significant drop from the June final reading of 99.8, a downward revision of June's initial 101.4. Today's number was below the Investing.com forecast of 100.

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Richmond Fed: Manufacturing Jumped 7 Points in July

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July 28th, 2015

Today the Richmond Fed Manufacturing Composite Index jumped 7 points to 13 from last month's 6. Investing.com had forecast no change at 6. Because of the highly volatile nature of this index, we include a 3-month moving average to facilitate the identification of trends, now at 7.7, indicating expansion.

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Home Price Rose at a Slightly Slower Pace, Year-over-Year, in May

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July 28th, 2015

With this morning's release of the May S&P/Case-Shiller Home Price we learned that seasonally adjusted home prices were down fractionally month over month and rose across the country over the last 12 months but at a slower pace. The seasonally adjusted 20-city index, the most closely watched of the Case-Shiller series, was down -0.2% from the previous month. Nonseasonally adjusted it was up 4.9% from a year ago.

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Home Ownership Drops to a New Interim Low

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July 28th, 2015

As residential real estate prices rise, home ownership continues to decline. The Census Bureau has now released its latest quarterly report with data through Q2. Here is a snapshot of the nonseasonally adjusted series with a 4-quarter moving average to highlight the trend.

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Forecasting Q2 GDP: Gazing Into the Crystal Ball

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July 27th, 2015

The big economic number this week will be the Q2 Advance Estimate for GDP on Thursday at 8:30 AM ET. With the Q1 GDP of -0.2% behind us, what do economists see in their collective crystal ball for Q2 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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The "Real" Goods on the June Durable Goods Data

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July 27th, 2015

Earlier today the Census Bureau posted the Advance Report on June 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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Dallas Fed Manufacturing Outlook Rose for a Second Month but Still in Negative Territory

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July 27th, 2015

This morning we got the most recent Dallas Fed Manufacturing Outlook. The latest index came in at -4.6, still negative but rose for the second month in a row. The Investing.com forecast was for a reading of -3.5.

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The Median Household Income Declined Fractionally in June

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July 24th, 2015

The Sentier Research monthly median household income data series is now available for June. The nominal median household income was down $60 month-over-month but up $1,250 year-over-year. That's a 0.1% MoM decrease and a 2.3% YoY increase. Adjusted for inflation, the latest income was down $235 MoM and up $1,150 YoY. The real numbers equate to a -0.4% MoM decrease and a 2.1% YoY increase.

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The Philly Fed ADS Business Conditions Index

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July 24th, 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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New Home Sales Decline to 482K

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July 24th, 2015

This morning's release of the June New Home Sales from the Census Bureau at 482,000 was well below general expectations, and the previous month was revised downward. The Investing.com forecast was for 546K. Here is the opening from the report:

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Understanding the CFNAI Components

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July 23rd, 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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Kansas City Fed Survey: Manufacturing Less Negative in July

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July 23rd, 2015

The Kansas City Fed Manufacturing Survey 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 -7, 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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Conference Board Leading Economic Index Increased Again in June

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July 23rd, 2015

The Latest Conference Board Leading Economic Index (LEI) for June is now available. The index rose 0.6 percent, which follows a 0.8 percent May increase. The latest indicator value came in above the 0.2 percent forecast by Investing.com.

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Chicago Fed: Economic Growth Picked Up Slightly in June

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July 23rd, 2015

"Index shows economic growth picked up slightly in June": 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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Existing-Home Sales Highest in Eight Years

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July 22nd, 2015

This morning's release of the June Existing-Home Sales shows the highest sales in eight years to a seasonally adjusted annual rate of 5.49 million units from a slight downward revision of 5.32 million in May (previously 5.35 million). The Investing.com consensus was for 5.40 million. The latest number represents a 3.2% increase from the previous month and a 9.6% increase year-over-year.

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FHFA House Price Index Rose 0.4% in May

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July 22nd, 2015

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 in May, up 0.4 percent on a seasonally adjusted basis from the previous month. Year-over-year the index is up 5.7% (nonseasonally adjusted). Investing.com had forecast a 0.5 percent MoM increase.

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Vehicle Miles Traveled: The Latest Look at Our Evolving Behavior

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July 21st, 2015

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

"Travel on all roads and streets changed by 2.7% (7.3 billion vehicle miles) for May 2015 as compared with May 2014." The less volatile 12-month moving average is up 0.19% month-over-month and 2.84% 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 0.11% month-over-month and up only 1.68% year-over-year.

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The Big Four Economic Indicators: Industrial Production

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July 21st, 2015

Earlier today the Federal Reserve released its annual revisions to Industrial Production. Prior to the revisions, Industrial Production had risen 26.2% since the end of the Great Recession in June 2009. The revisions trim the rise to 22.8%. The indicator is -0.74% off its nominal high in December of last year, down from -0.55% before the revisions.

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

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July 21st, 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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NYSE Margin Debt: Up 1.2% over the Previous Month

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July 20th, 2015

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

The NYSE margin debt data is about a month old when it is published. The latest debt level is up 1.2% month-over-month. Real (inflation-adjusted) debt rose 0.82% month-over-month and is 1.3% off its record high two months prior in April.

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Secular Trends in Residential Building Permits and Housing Starts

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July 20th, 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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The Big Four Economic Indicators: Weak June Real Retail Sales

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July 17th, 2015

Nominal Retail Sales in June fell -0.27%, and the two previous months were revised downward from 1.21% in May to 1.03% and from 0.24% to 0.03% in April. June Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, came in at -0.59% month-over-month. This was the fifth monthly decline over the past seven months. 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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Inflation: An X-Ray View of the Components

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July 17th, 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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Understanding Secular Trends in Inflation

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July 17th, 2015

The Consumer Price Index for Urban Consumers (CPI-U) released this morning puts the year-over-year inflation rate at 0.12%. It is substantially below the 3.84% average since the end of the Second World War and its 10-year moving average, now at 2.14%.

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What Inflation Means to You: Deconstructing the Consumer Price Index

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July 17th, 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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New Residential Building Permits Highest Since 2007

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July 17th, 2015

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for June new residential building permits. The latest reading of 1.343M was well above the Investing.com forecast of 1.150M.

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New Residential Housing Starts Above Forecast for June

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July 17th, 2015

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for June new residential housing starts. The latest reading of 1.17M was above the Investing.com forecast of 1.10M.

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June Consumer Price Index: Year-over-Year Core at 1.8%

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July 17th, 2015

The Bureau of Labor Statistics released the June CPI data this morning. The year-over-year unadjusted Headline CPI came in at 0.12% (rounded to 0.1%), up from -0.04% (rounded to 0.0%) the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 1.76% (rounded to 1.8%), up fractionally from the previous month's 1.72% (rounded to 1.7%). Here is the introduction from the BLS summary, which leads with the seasonally adjusted monthly data:

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NAHB Housing Market Index: Highest Since November 2005

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July 16th, 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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Philly Fed Business Outlook: Remains Positive Despite Decline

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July 16th, 2015

The latest gauge of General Activity came in at 5.7, down from last month's 15.2. The 3-month moving average came in at 9.2, fractionally down from 9.8 last month. Since this is a diffusion index, negative readings indicate contraction, positive ones indicate expansion. The Six-Month Outlook was up at 41.5, versus the previous month's 39.7.

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Producer Price Index Remains Negative Year-over-Year, but Seeing Small Increases

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July 15th, 2015

Today's release of the June Producer Price Index (PPI) for Final Demand came in at 0.4% month-over-month seasonally adjusted. That follows the previous month's 0.5% increase. Core Final Demand (less food and energy) came in at 0.3% month-over-month following a 0.1% change the month before. The Investing.com forecasts were for 0.2% headline and 0.1% core. The year-over-year change in seasonally adjusted Final Demand is -0.7%, up from last month's second lowest in the brief history of this data series at -1.0% (the lowest being the -1.3% in April).

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Empire State Manufacturing Conditions Improve Slightly

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July 15th, 2015

This morning we got the latest Empire State Manufacturing Survey. The diffusion index for General Business Conditions at 3.9 (3.86 to two decimals) shows an increase from last month's -2.0, which signals a slight improvement in activity. The Investing.com forecast was for a reading of 3.0.

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Retail Sales: Surprising Drop in June

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July 14th, 2015

The Census Bureau's Advance Retail Sales Report released this morning shows that seasonally adjusted sales in June were down 0.3% month-over-month and up 1.4% year-over-year. Core Retail Sales (ex Autos) came in at -0.1% MoM and 0.1% YoY. The Investing.com forecasts were 0.2% for Headline Sales and 0.5% for Core Sales.

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NFIB: "Small Business Takes Significant Hit in June"

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July 14th, 2015

The latest issue of the NFIB Small Business Economic Trends is out today. The update for June came in at 94.1, a 4.2 point decline from the previous month. The index is now at the 21st percentile in this series. The Investing.com forecast was for 98.6. Here is the opening summary of the news release.

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Baby Boomer Employment Across Time

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July 13th, 2015

The 20th century Baby Boom was one of the most powerful demographic events in the history of the United States. We've created a series of charts to show seven age cohorts of the employed population from 1948 to the present. What we see is essentially the "Boomer Bulge" in employment across time. Those born between 1946 and 1964 continue to grow the employment of the two oldest cohorts. It will be interesting to see how long those two trends continue.

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Treasury Snapshot: A Look at Recent Volatility

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July 9th, 2015

US Equity indexes have had a volatile week so far, with chronic Grexit tensions being trumped by anxieties over the deflating bubble in Chinese equities. Treasury yields have shared in the volatility. The closing yield on the 10-year note has had a 27 basis-point range over the last nine sessions: 2.49% on June 26 to 2.22% at yesterday's close, which was 10 bps below today's close.

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Trends in the Teenage Workforce

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July 8th, 2015

Last week 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 decided to revise one of our monthly charts on Labor Force Participation to include the age 16-19 cohort -- one we've lumped in the past with the 20-24 year-olds. The first chart below features the three-month moving averages of the non-seasonally adjusted participation rates to better highlight the trends.

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Multiple Jobholders: Two Decades of Trends

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July 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 Levels

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July 8th, 2015

Let's take a close look at Thursday'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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Five Decades of Middle Class Wages: June 2015 Update

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July 7th, 2015

We've updated this series to include the most recent release of the employment data and extrapolated CPI. The latest hypothetical annual earnings are at $35,363, down 14.9% from 42 years ago.

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

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July 7th, 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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Job Openings & Labor Turnover: Clues to the Business Cycle

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July 7th, 2015

The latest JOLTS report (Job Openings and Labor Turnover Summary), data through May, 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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Trade Balance Up 1.2B from Revised April Headline

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July 7th, 2015

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

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Demographic Trends for the 50-and-Older Work Force

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July 6th, 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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ISM Non-Manufacturing: Continued Growth in June at a Slightly Faster Rate

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July 6th, 2015

Today the Institute for Supply Management published its latest Non-Manufacturing Report. The headline NMI Composite Index is at 56 percent, up 0.3% percent from last month's 55.7%. Today's number came in fractionally below the Investing.com forecast of 56.2 percent.

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Another Look at Long-Term Trends in Employment by Age Group

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July 6th, 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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The Labor Market Conditions Index for June Shows Weak Expansion

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July 6th, 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 June data indicates weak expansion at 0.8. Extensive historical revisions were made, with the May value revised from 1.3 to 0.9.

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Treasury Yields in Perspective

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July 3rd, 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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The Big Four Economic Indicators: Nonfarm Employment

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July 2nd, 2015

Nonfarm Employment has been in a steady upward trend. Today's report of 223K new nonfarm jobs in June was a bit below expectations. More significant is the fact that May nonfarm payrolls were revised downward by 26K from 280K to 254K and April downward by 34K from 221K to 187K, a total revision of -60K for the two months. The unemployment rate ticked down two notches from 5.5% to 5.3%, a drop driven by a larger decline in the labor force (432K) than the reduction in the unemployed (375K).

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The Civilian Labor Force, Unemployment Claims and the Business Cycle

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July 2nd, 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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June New Jobs Came In Below Forecast and May Was Revised Down by 26K

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July 2nd, 2015

Today's report of 223K new nonfarm jobs in June was a bit below the Investing.com forecast of 230K. More significant is the fact that May nonfarm payrolls were revised downward by 26K from 280K to 254K and April downward by 34K from 221K to 187K, a total revision of -60K for the two months. The unemployment rate ticked down two notches from 5.5% to 5.3%, a drop driven by a larger decline in the labor force (432K) than the reduction in the unemployed (375K).

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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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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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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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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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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 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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