The earlier economic news of this week painted a rosier picture than all of last week’s economic news combined. We’ll take any good news we can get after first quarter’s Gross Domestic Product was reported to be worse off than Bill and Hillary Clinton on January 21, 2001.
Small business started the mostly positive week off when the National Federation of Independent Business (NFIB) reported on Tuesday that its Optimism Index was up 1.4 points to 96.6 in May. This is its highest report since September 2007 and the third consecutive monthly gain. It’s important to note NFIB’s note that its Optimism Index is lower at this point in our recovery relative to other recoveries.
The U.S. Commerce Department reported on Tuesday that April wholesale inventories, stuff stored in warehouses while it waits for an owner, increased 1.3 percent on top of March’s 1.6 percent increase. Businesses increase inventories when they think consumers are ready to buy. Consumers have shown they’re ready to buy, despite their best interest. Inventory stars include cars, furniture and pharmaceutical drugs.
Finally on Tuesday, the Labor Department reported that JOLTS – not the hyper-caffeinated cola of yore, but Job Openings and Labor Turnover – increased 4.46 million. JOLTS measures the number of job openings. The more job openings the better for those seeking jobs, as long as business isn’t too selective and ideally adopts a Google-esque approach to hiring.
The good news continued through Wednesday when MBA reported that mortgage purchase applications for the week ended June 6th increased 10.3 percent from the week prior. Refi applications led the way as 54 percent of all applications, up 1 percent from the week prior.
On Thursday, the Labor Department reported that month-over-month and year-over-year May import prices increased 0.1 percent and 0.4 percent respectively. This has abated inflation concerns, but the tea leaves will be confirmed (or denied) by today’s producer price report and next Tuesday’s consumer price report.
In less rosier news, the Commerce Department reported on Thursday that May retail sales rose less than expected, though sale were up 0.3 percent, led most by auto sales, while April’s report was revised up to 0.5 percent. Back to back positive numbers is a good thing. The Labor Department then reported that initial jobless claims for the week ended June 7th increased 4,000 to 317,000. While that does mean more people are unemployed, the week to week increase has started to shrink and that, also, is a good thing.
The Labor Department reported today that May’s producer price index fell 0.2 percent reducing inflation concerns even more. Whether Main Street feels this in its wallet, however, is another story. Later today the consumer sentiment report will be released and will give us insight on that. We will updated the #MoneyConscious Mash Up as we have time.
While NJ college students go without food, President Obama moved to help college graduates drowning in debt that will likely only benefit his Democratic colleagues up for reelection in November and the most well off. Your tax dollars will pay for those votes and few college graduates will benefit. The government continues to eat the producers like a mystery species ate a great white. A natural law of the universe says something that can’t go on forever won’t.
While Middle America does all the work, it may be worse off than commonly believed with an average income of $44,000 and average savings rate of 4 percent. Averages mislead because the wealthy, who save 12 to 38 percent of their income, pulls the number up. Middle America’s remedy is a relapsed use of credit cards, which was growing at an average annual rate of 10.2 percent as of April. This is why we said consumers have shown they’re ready to buy the stuff in inventories despite their best interest.
Middle America is smart enough to know that current economic trends put them in a precarious position for retirement, as 59 percent of those recently surveyed by Gallup said they were either very or moderately worried they won’t have enough money. Research suggests that Gen X, our people, has been hit the hardest with retirement preparation. We’ve had bad luck with timing. We entered the job market just as the dot.com bubble burst, bought homes just as housing peaked and crashed, saw our small retirement savings shrink after the housing crash, and now suffer with under-employment and unemployment with the rest of the country. Pew Charitable Trust found that only one-third of Gen X has more wealth than their parents held at the same age.
As 1500 Days suggests, retirement and even early retirement is on a lot of people’s minds, which may be why despite current economic conditions, Gen X continues the trend set since the 70’s of those in their early 40s who drop out of the labor pool. Maybe like Ruddigar at FatGuySkinny.com Wallet, they’ve found creative ways to make up for lost income.
That’s this week’s economic and personal finance news in a nutshell. Come back every week for the #MoneyConscious Mash where we try to make finance a little more interesting.
Another good read: Our Wallet is Our Weapon Last Week’s Mash Up