Unlike Tom Brady’s cell phone, the Money Conscious Mash Up has returned! We’re excited to bring back the Money Conscious Mash Up (#MCMU) because it covers a topic that brings more people to tears than Cecil the Lion. We strongly believe that being money conscious includes having a basic understanding of what’s going on in the economic world and how to respond to it. The #MCMU brings this news to you in an entertaining way, and you’ll be more informed after reading it than The Huffington Post.
On Tuesday, the S&P Case-Shiller May Housing Price Index showed signs of weakness in the housing market. May was down 0.2 percent from February’s 0.0 percent flatline. Declines were broad, affecting 12 of the 20 cities included in the index. Unfortunately for Denver home buyers and fortunately for Denver home sellers, we led the increases up 10 percent year-over-year. We call this the marijuana-effect. No negotiating when high!
Also released on Tuesday was The Conference Board’s July Consumer Confidence Index, which came in at 90.9, down from June’s 99.8. The component that caused the most drag, due to pessimism on the jobs outlook, was the expectations component. This was confirmed on Friday’s Employment Cost Index. Also, people don’t want to buy cars anymore. The jobs outlook and pending disinterest in car buying are likely correlated. Should this continue, auto interest rates may sink as low as Ryan Seacrest’s Knock Knock Live.
On Thursday, the first of three Commerce Department estimates for second quarter Gross Domestic Product (GDP) came in at 2.3 percent. A slight increase in consumer spending offset a decrease in business spending. It’s a red flag when business spending slows as much as Snoop Dogg’s European Vacation.
First quarter GDP was revised up to 0.6 percent from -0.2 percent. A day prior The Fed suggested a “moderately expanding economy” and a pending rate hike, but it’s not clear if The Fed does a round of shots before it reads the report.
Finally, on Friday came the US Labor Department’s Q2 2015 Employment Cost Index which increased 0.2 percent, the lowest result in 33 years and down from Q1 2015’s 0.7 percent increase. Both of the index’s components, wages & salaries (component one) and benefits (component two), were down. Wages & salaries slowed the most to 0.2 percent, down from Q1 2015’s 0.7 percent. Year-over-year, however, wages & salaries are up 2.1 percent. With year-over-year inflation at 0.1 percent, that’s a real increase in salaries & wages of 2 percent.
Clearly consumers have concerns about the economy’s future and are adjusting spending accordingly. Reports suggest that more consumers are putting new money towards debt and savings, and we agree with that approach. Since our last #MCMU, our recommendations haven’t changed and may last longer than Beniffer II’s marriage. Pay off debts, save and invest. Unnecessary spending should be avoided.