Happy Good Friday! Not only is today a sacred religious holiday that causes markets the world over to be closed, but it’s actually a good Friday. This week’s economic news was happier than a half-kilted Kiwi meeting Cambridge Dutchess Kate.
For starters, the Commerce Department reported on Monday that U.S. retails sales in March were up 1.1 percent. This was retail’s largest gain in one and a half years. The core-sales number, which excludes most of the goods on which we citizens spend our money, such as gas and food, was also up 0.8 percent. This is good news because these goods are more discretionary and our discretion to buy more of them suggests a strengthening economy.
On Tuesday, the National Association of Home Builders/Wells Fargo Housing Market Index inched up one point to 47 in April from 46 in March. While it’s still below 50, the threshold of happiness, it’s up and we’ll clap along like a room without a roof to that. Despite home builders being as unsettled about the housing market as the rest of America is with Pharrell’s hat fad, the Commerce Department reported on Wednesday that March housing starts increased 2.8 percent to a seasonally adjusted 946,000 in addition to its upwardly revised 1.9 percent report of February housing starts.
The Federal Reserve reported on Wednesday that U.S. manufacturing increased 0.5 percent in March, while it revised February’s industrial production up another 1.2 percent for a total increase of 1.8 percent. At the same time, The Fed also reported March’s capacity utilization ratio at 79.2, the highest since June 2008. Capacity utilization is the ratio of actual production output to possible production output. An increase suggests increased demand and is a leading indicator for unemployment. Ratios between 82 and 85 percent suggest inflation, which is good to an extent.
Closing out the week’s good news, the Philadelphia Federal Reserve reported its factory index for the states of Pennsylvania, New Jersey and Delaware is doing better than the Phillies and increased to 16.6 in April from 9 in March. Finally, it was reported on Thursday that last week’s jobless claims, the number of Americans who filed for unemployment insurance, only increased 2,000 to 304,000 and remained near a seven year low.
If you had to wager a guess based on the above information, which direction would you say core-inflation went in March? You guessed it! It went up. The “bad” news of the week, reported on Tuesday, was that core inflation, the goods that really matter to us, was up 0.2 percent in March because everyone is spending like they’re at Coachella these days. Year-over-year inflation of the overall economy increased to 1.5 percent driven largely by a 0.4 percent increase in food costs. Expect a lot of grilled chicken at your BBQs this summer.
While the economic data is slowly getting better, long-term unemployment is currently the greatest pressure on the U.S. economy. As the U.S. government is already meddling where it doesn’t belong, why not meddle better and take a page out of Sweden’s playbook and offer employment subsidies? Sorry, we know the answers. It’s not politically expedient and business shouldn’t need the government to treat it like a mule.
We’ve been advising future college students, who likely don’t read our blog, for months to go for manufacturing jobs, as that is where economic growth has been strongest, gray-hairs are retiring in droves and it’s not your grandfather’s manufacturing. It was brought to our attention this week, because we didn’t put the pieces of the puzzle together ourselves, that cyber security is another area of employment expansion. The U.S. Government, alone, is considering hiring 6,000 ‘Cyber Warriors’. Private-sector cyber security should soon follow. Future college students should adopt at least one of the successful traits of the rich, and plan ahead, and consider cyber security when they consider worthwhile college majors.
If your child does plan to go to college don’t let college financially screw them like a college athlete. The old ways of paying for college, i.e. mom, dad and savings, are no longer sufficient. That’s why we put our noggins together and created the #MoneyConscious Student, a 29-page eBook to help kids financially prepare for and manage college expenses. Preorder it now and help the student in your life.
We wrote this book to help current and future college students achieve long-term financial goals such as building a financial safety net, buying a house and retiring. These are goals many millennials are behind in achieving and that makes us even sadder than Amy Poehler and Will Arnett filing for divorce.
That’s the economic and personal finance news that’s worth reading this week. Come back every Friday for another Debt Free Guys’ #MoneyConscious Mash Up to help you understand what’s going on and achieve your financial goals, so you don’t lose precious sleep.