The MTV Video Music Awards thought it was the newsiest news of the week last week. With an uber volatile stock market that resulted in a 3 percent drop week to week, the stock market proved otherwise. You know the economy’s in the toilet when you hit the lottery and get an IOU from the government. If 4, 8, 15, 16, 23 and 42 resulted in an IOU, it would’ve saved us six years and colossal disappointment.
In economic news, things didn’t start out so good when, on Tuesday, Gallup released its August US Economic Confidence Index (ECI). The ECI measures consumers’ mindset as to their confidence in the economy’s future. Scores range from +100 (“I’m on top of the world!”) to -100 (“This sucks!”). A score of zero is the equivalent of “Meh.”
August’s reading was -13, down from July’s -12. A closer look at week-to-week trends indicates the numbers were positive towards the beginning of August and not so towards the end of August. Consumers are concerned and we concur. This is why we continue to advise spending minimally and saving maximally.
On Thursday, the Commerce Department released its July Factory Orders Index, which showed a significant drop to 0.4 percent from June’s upwardly revised 2.2 percent. The drop was largely based on the drop in energy products orders (petroleum and coal). Durable goods orders and capital spending both showed strength and suggest business is more confident in the economy than consumers. Of course, business can hire robots to lay off consumers to “vacation” in their people zoos, which may be the safest place when apes take over.
Lastly, on Friday, the U.S. Department of Labor released its August Employment Situation Report that was more boring and mixed than Kanye’s VMA speech. While August’s headline unemployment rate dropped 1 point to 5.1 percent from July’s 5.2 percent and wages increased fractionally just over 0.3 percent, hiring was the lowest in five months, a record 94 million people are not in the labor force and the employment participation rate is the lowest since Steve Jobs birthed Apple II.
Focus on savings and investments. Control spending. Maintain diversification with a slight overweight toward cash. That’s the best defensive strategy against these volatile domestic and global markets and economies.