#MoneyConscious Mash Up: National Rum Day Edition

ECON

Economic news adopted the four-day work week that’s created a lot of buzz among the ruling class as of late and took Monday off. We suppose it’s easier to work only four days a week when you don’t really need to work at all. We, also, don’t suppose the business leaders spouting three and four day work weeks expect their employees will maintain the same salaries generated by their five to seven day work weeks. We’ll have a rum and coke, please.

Tuesday started out with an important report when the National Federation of Independent Business (NFIB) announced that small businesses are as happy as a dancing cop when its Small Business Optimism Index for July increased by 0.7 points to 95.7 from 95 in June. This increase, after June’s decrease, is attributed to improvements in employment, and the manufacturing and service sectors. This leading indicator suggests a positive outlook for the economy, plans for business expansion and bodes well for job seekers. Manufacturing has been a bright spot in the economy, especially in the east, and we suggest anyone seeking greener pastures consider this.

Then, the Bureau of Labor Statistics reported its Job Openings and Labor Turnover Survey (JOLTS), which showed that there were slightly more job openings, 0.1 percent to 3.5 percent, on the last day of June than the last day of May, 4.671 million and 4.577 million respectively. The hire rate, quits rate and layoffs rate were little changed, if at all. This increase in job openings taken in tandem with the U3 and U6 unemployment rate suggests that job market improvements are moving no more quickly than NBC News’ release of David Gregory from Meet the Press, but they are improving.

Wednesday was a somber day, not least of which because it came to pass that all of Madonna’s ‘Vogue’ icons are now dead. First the Commerce Department reported that July retail sales were flat at 0 percent, after June’s modest 0.2 percent increase. Retails lackluster July performance was led largely by a 0.2 percent drop in car sales. Core retail sales, which removes cars, gas, food and construction sales and closely mirrors Gross Domestic Product (GDP) increased only 0.1 percent and has caused economists to lower third quarter GDP expectations after second quarter’s mysterious 4 percent increase.

The Commerce Department then reported that business, as “apparently” as Noah Ritter, may have gotten ahead of itself with June’s 0.4 percent increase in business inventories, after the recent retail sales slowdown. This follows May’s 0.5 percent increase. Inventories are another component of GDP and high inventories, similar to deodorant, aren’t always a good thing.

On Thursday, the Bureau of Labor Statistics released import/export prices that showed the July U.S. import index declined 0.2 percent, led in large part to a 1.2 percent drop in fuel costs. This is a good sign for consumers, as costs remain contained, especially for gas. The U.S. energy supply is being greatly helped by domestic oil growth, mainly in North Dakota. If manufacturing in the northeast isn’t your thing, drill oil up north. U.S. export prices to other countries remained the same as June.

The highlight report of the week was Reuters/University of Michigan’s preliminary August consumer sentiment report after July’s surprise of 81.8. Augusts’ preliminary report created concern with a drop to 79.2. Economists disconnected from reality assumed that lower gas prices and marginal job market improvements would show consumers to be as high as Lindsay Lohan in Londontown. They’re not.


Compare month-over-month (MOM) numbers: #MoneyConscious Mash Up: National Daiquiri Day Edition


While the job market has improved, it’s not improving quickly enough. We’ll continue to keep our eyes on jobs, wages and the Federal Reserve Board’s Quantitative Easing Program. We continue to stress the need for Americans to save and invest, even if this means cutting back on spending. We, also, believe that today’s “new normal” requires workers/consumers to diversify income streams. To rely solely on one employer, especially a bigger employer is risky at best.

PF

July’s flat retail sales and May and June’s increased inventories suggest that consumers, despite June’s consumer spending that increased 0.4 percent and July’s consumer sentiment index that increased 0.5 from the previous month, may not be all that excited to separate from their hard earned dollar. This puts consumers at a cross-road. Hiring has increased, but with low-wage, part-time work. Yes, that means increased incomes, but consumers haven’t started to spend like they did before reality hit in 2008.

It may be the case that consumers have wised up to the risks of debt, as they experience in their own lives and more and more studies show that overspending and, consequently debt, make achieving financial independence next to impossible. Even debt once considered a non sequitur, such as mortgage and student loans, now have bad reputations. As recently reported by the Consumer Financial Protection Board, the median mortgage debt for seniors increased 82 percent from 2001 to 2011, from $43,300 to $79,000. This cost, alone, can eat into a retiree’s retirement principle and, consequently, retirement investments, growth and income. If this is you, here are five tips to pay your mortgage off early. We’re doing numbers one and four and have done two and three.

With stagnant wages and low income jobs, it’s certainly hard to invest these days. However, prudent decisions that lean towards the conservative are the best options now more than ever. For example, a recent study by Fidelity suggest that the key difference between those who save and invest $1 million for retirement and those who don’t is that the millionaires earn 100 percent of their company 401(k) match. If the decision is to buy a new TV or fund your 401(k), fund your 401(k). This is easier said than done, but true nonetheless. 401(k) matches are a salary increase and automatically does for you what billionaires do for themselves. Create a budget to make this happen; otherwise you’ll regret it later. Don’t half-ass your financial future. It’s really about balancing financial priorities.

That’s the economic and personal finance news that we think is worth your time this weekend. Come back every Saturday for the Debt Free Guys’ #MoneyConscious Mash Up to let us help you be #moneyconscious. It’s set to be 91 degrees in Denver today, so we’ll likely knock back a few pina coladas with rum. If you have time, please do the same.

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Comment List

  • Froogal Stoodent 18 / 08 / 2014 Reply

    I assume that link was supposed to say "happy as a dancing cop."

    • John Schneider 20 / 08 / 2014 Reply

      Yes. Sometimes my editor drinks too much wine while editing. 😉

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