Happy National Daiquiri Day! We’ll have our share of daiquiris as Denver should reach a high of 97 degrees, just two days after the high was 75 degrees.
We’ll enjoy our drinks, too, because, all in all, this week’s economic news makes us happier than a washed and blown dried cow. Consumer sales were the first indicators released. The first of those was the International Council of Shopping Centers-Goldman Store Sales, which tracks the sales of slightly fancier stores. You know, Targets relative to Wal-Marts. The report for the week ended July 12th saw an increase of 0.1 percent week-over-week (WOW) and 4.5 percent increase year-over-year (YOY). Shortly thereafter, the Commerce Department released its retail sales report that showed overall June retail sales increased 0.2 percent. The Redbook Index was the next shopping related report released, which increased 4.1 percent in the week ended July 7th over the same week the year prior. All totaled, this suggests that consumers are feeling comfortable enough to spend, but are exercising caution.
The first non-shopping related index released on Monday was the Empire State Manufacturing Survey. It increased from June’s 19.28 to 25.6 in July and confirms our belief that manufacturing is where the jobs are. Next was June’s import/export, which remained relatively flat and confirms for The Fed that inflation remains somewhat contained. For you and me, declines in imports and exports suggest a combination of declines in food, feed, beverage, coal and natural gas prices. Finally the Census Bureau reported business inventories rose 0.5 percent in May and suggests business confidence in future sales. As certain as what should be expected at an adult sleepover in the New York Museum of Natural History, increased inventories that yield increased sales should yield increased jobs.
On Tuesday, the Mortgage Bankers Association (MBA) reported its purchase index fell harder than Elastigirl on her face with an 8 percent drop in the July 11th week, a decline two time as much as its increase the prior week. Refinance applications and the 30-year fixed rate remained steady, only falling 0.1 and 0.001 percent respectively. The Bureau of Labor Statistics (BLS) reported that June’s producer price index rebounded by 0.4 percent, after a 0.2 percent drop in May and could yield a slight increase in future prices. Pay attention at the store and adjust your budget accordingly.
The Federal Reserve then reported that industrial production’s pace slowed to an increase of 0.2 percent in June, down from an increase of 0.5 percent in May. Industrial production includes manufacturing, mining and utilities. Individually, manufacturing increased 5.5 percent in the second quarter and remains the economy’s shining star. The Atlanta Federal Reserve Bank then reported that the 12th district sees little change in inflation expectations over the next 12 months, which suggests that prices should remain flat. Still pay attention at the store, though.
The last news to come on Wednesday was the National Association of Home Builders/Wells Fargo sentiment index, which threw a wrench in an otherwise volatile to negative sector when it reported an increase to 53 in July, up from 49 in June. This is the highest since January and shows that home builders are feeling as good as a drunken gurl on daiquiris.
By Thursday, Thor had a sex change, Captain America turned black, and Archie Andrews died taking a bullet for a gay friend. Those concerned the real world would come to an end weren’t reassured when the Census Bureau said June housing starts dropped to a nine month low and added insult to home builder’s hangover injury. Starts fell 9.3 percent from May.
The rest of the day’s economic news was rosier; starting with the Labor Department’s report that initial jobless claims fell 3,000 to a seasonally adjusted 302,000 for the week ended July 12th. The four-week moving average, which irons out week-to-week volatility also fell 3,000 to 309,000. Bloomberg’s Comfort Index, unlike Bloomberg’s NYC large soda ban, remained little changed for the week ended July 13th. Finally, the Philadelphia Federal Reserve Bank reported that mid-Atlantic factories in July are doing better than Trump Casinos when it surged to 23.9, up from 17.8 in June, the highest since March 2011.
Friday started out a bit somber when the University of Michigan/Thomson Reuters consumer sentiment July preliminary reading came in at 81.3, down from June’s final 82.5. The drag on the report is from consumer’s concerns about future job prospects, similar to what consumer spending suggested on Tuesday.
This caution is largely due to low wage growth that has, so far, barley kept up with the economy. As Barron’s last week quoted Stephanie Pomboy of MacroMavens, “spending [and sentiment] is only as good as income growth.” While every business leader and politician on either side of the isle have pushed for immigration reform, we have to wonder if their goal is simply to fill the economy with cheaper labor while exiting Americans continue to fill part-time jobs.
The Conference Board rounded out the week on a positive note with its indicator of leading indicators, the Leading Economic Index, which saw a 0.3 percent increase in June from an upwardly revised 0.7 percent increase in May. Economists interpret this to mean a better second half of 2014.
All totaled the economic news for the week does suggest slow, but steady growth. Let’s hope so. Either way, we’re drinking daiquiris today.
Business majors should feel good, too, as job prospects for them have started to look up. However, prospective college students should remember, as we’ve said for a while, that the notion that college is a must for everyone is false. There are numerous alternatives that yield good salaries, as we have seen in manufacturing in recent years. We continue to hammer on the higher education bubble issue, as it’s one of our greatest concerns about the economy.
Choose a career that will make you happy, not one that will make everyone else happy. If you eventually burn out with whatever career you choose, don’t fear. As Addison Cash says, job burnout doesn’t have to by scary.
At the end of the day, though, it’s not about how much you earn. It’s about how much you save. If, in your golden years, you fear running out of money remember that you probably shouldn’t have bought that fancy car. Then, follow these instructions.
That’s what you need to know about this week’s economic and personal finance news. Come back every Saturday for the Debt Free Guys’ #MoneyConscious Mash Up, so you can be the smartest person in your office on Monday.
Also read: Turning a Little Money into a Lot of Money