Of all the national holidays celebrated today, we chose the National Yo-Yo Edition subtitle because, like a Japanese size-label, you sometimes have to call a spade a spade, and “yo-yo” concisely describes the past several weeks of economic news.
On Monday the Institute of Supply Management reported that its index of national factory activity dropped 1.7 points in May to 53.2 from 54.9 in April. At the same time, Markit’s May manufacturing PMI came in at 56.4, a three month high. For both metrics, anything over 50 suggests expansion, so we’re in positive territory.
Also, on Monday, the Commerce Department said the pace of home building, which picked up over the last couple of months, was a bigger natural disaster in April than a Lena Dunham skirt when it increased by only 0.2 percent. Economists, who are as accurate as the weatherman, expected an increase of 0.6 percent.
Tuesday was good, as both reports released were positive. First, the Commerce Departments reported that April U.S. factory orders rose 0.7 percent, led largely by the 0.6 percent durable goods orders increase. The least surprising news of the week came from automakers who reported a 11.3 percent May auto sales increase. Now you’re calling us cynics because a 11.3 percent increase is significant. We agree, but our concern is that car sales are due to pent up demand and not because consumers can afford new cars. We hope we’re wrong.
You’ll notice here why we chose to reference National Yo-yo Day, because here the news gets better but even the positive news kinda sucks. A spillover from Monday was the report that U.S. mortgage refinance and purchase applications continued their fall by another 3.1 percent for the week ended May 30th, as reported by the Mortgage Bankers Association.
After last week’s deflating GDP report, Wednesday’s report that first quarter U.S. productivity fell 3.2 percent was more offense than a live baby pinned to a wedding dress. Hours worked increased 2.2 percent, but wages stayed stagnant with a 0.4 percent increase after adjusted for inflation. At the same time, the U.S. trade deficit increased by a whopping 6.9 percent. That means the world isn’t buying America’s stuff like Michael Jackson couldn’t buy an iPhone.
The most important and anticipated news of the week came when ADP and Moody’s Analytics reported that the U.S. private sector added only 179,000 jobs in May, far below analyst expectations of 215,000. Many of the jobs added in May, as reported by the Institute of Supply Management, were in service. May’s service sector index rose to 56.3 from April’s 55.2. This is positive news for the service sector, but negative news for the economy. Service sector jobs build a strong economy like a stolen Bible fuels the heart of a devout Christian.
On Thursday, Bloomberg reported that its Consumer Comfort Index increased to 35.1 from 33.3 the week earlier and American’s view of their personal finances, also, rose to 50.4 from 49.5. This news came at the same time that CoreLogic reported that due to home prices and the stock market increases, household net worth increased $1.5 trillion and household debt grew 2 percent in the first quarter. While reports show Americans overall feel better about their finances, initial weekly jobless claims for the week ended May 31st increased 8,000.
On Friday, the Department of Labor reported that the U.S. economy returned 217,000 jobs, which put it back to January 2008 levels, but the official unemployment rate stayed at the April 2014 level of 6.3 percent. According to the more comprehensive May U6 unemployment number, 12.2 percent of the population doesn’t believe things are that good. The Federal Reserve, also, reported that Consumer Credit increased at a 10.2 percent annual rate in May, up from 7.5 percent in March. That’s how Americans are buying cars.
If you’re part of the 52 percent of Americans who live in a home they can’t afford, sleep easy knowing the average pay for you and your friends’ increased 2.6 in percent in 2013 while top CEO pay increased 400 percent. Sure, that’s only two really awesome CEOs. 44 of the top 50 CEOs got the shaft with a measly 21.7 percent increase. At that rate, you’ll be able to move outta that expensive home or your parent’s basement any day now if your parent’s will give you the loan. When you do move out, here are tips to keep moving costs down.
Especially if you’re like Brent and jumped into the job market at just the wrong time, understand that a balanced life is nearly impossible, if not overrated. So, like Stephanie, hustle your ass and stay laser focused on attaining a job and independence. The dreams and goals we all strive for will simply come later for some than others, but are still worth the aspiration.
That’s this week’s #MoneyConscious Mash Up. Come back every Friday for our lighthearted take on the week’s economic and personal finance news that we think is fit to print.