This commentary has been updated to include today's release of Nonfarm Employment for January. As the adjacent thumbnail of the past year illustrates, Nonfarm Employment remains in its upward trend. January's 227K increase in total nonfarm payrolls was accompanied by a 1K upward revision for December and a 41K downward revision for November (reflecting annual benchmark revisions). The unemployment rate ticked upward from 4.7% to 4.8%. The Investing.com consensus was for 175K new jobs and the unemployment rate to remain unchanged.
The Sentier Research median household income data for December, released this morning, came in at $57,827. The nominal median shrank by $394 month-over-month and is up only $669 year-over-year. In percentages, the latest month is down 0.7% MoM and up 1.2% YoY. Adjusted for inflation, the latest month was down $558 MoM and down $529 YoY. The real numbers equate to changes of -1.0% MoM and -0.9% YoY.
Note: The NYSE has released new data for margin debt, now available through December. The latest debt level is down 2.2% month-over-month. The current level is 3.5% below its record high set in April 2015. The December data gives us an additional sense of investor behavior during the election rally.
Today we have the ADP January estimate of 246K new nonfarm private employment jobs, an astonishing increase over December's 151K, which was a tiny downward revision of 2K. November was revised upward by 11K.
In this morning's ADP employment report we got the January estimate of 246K new nonfarm private employment jobs from ADP, a substantial increase over December's 251K, which was a tiny downward revision of 2K. October was revised upward by 5K. The popular spin on this indicator is as a preview to the monthly jobs report from the Bureau of Labor Statistics. But the ADP report includes a wealth of information that's worth exploring in more detail.
Personal Income (excluding Transfer Receipts) in December rose 0.32% and is up 3.6% year-over-year. However, when we adjust for inflation using the BEA's PCE Price Index, Real Personal Income (excluding Transfer Receipts) was reduced to a 0.16% monthly increase. The real number is up 1.9% year-over-year.
Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? At this point, approaching eight years later, the S&P 500 has set a series of inflation-adjusted record highs based on monthly averages of daily closes. 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.
The accompanying chart is a way to visualize real GDP change since 2007. It uses a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics.
The latest new orders number at -0.4% month-over-month (MoM) was well below the Investing.com consensus of 2.6%. The series is up 1.6% year-over-year (YoY). If we exclude transportation, "core" durable goods came in at 0.5% MoM, which matched the Investing.com consensus of 0.5%. The core measure is up 3.5% YoY.
Earlier today the Census Bureau posted the Advance Report on Durable Goods New Orders. This series dates from 1992 and is not adjusted for either population growth or inflation. Let's now review Durable Goods data with two adjustments. In the charts the gray line shows the goods orders divided by the Census Bureau's monthly population data, giving us durable goods orders per capita. The blue line goes a step further and adjusts for inflation based on the Producer Price Index for All Commodities, chained in today's dollar value.