Celebrating National Taco Day today is funny because it’s not a Tuesday and that’s weird. It’s, also, funny that America has a national holiday to celebrate a Mexican treat. Today is National Vodka Day, too, which is a Russian treat. Who says Americans don’t embrace multiculturalism?
If there was ever a week with economic news that highlighted the worker, this week was it. Everything from personal incomes to employment to the threat of layoffs was reported. Of course, the only thing the stock market seemed concerned about is the much prophesied stock market correction. Doomsdayers and naysayers abound, a shot of tequila or vodka goes down.
Monday’s big news was the Bureau of Economic Analysis’ August Personal Incomes and Outlays report, which tracks the personal incomes and expenses of American households. This is America’s cash flow. Personal incomes for August increased 0.3 percent, led by wages and salaries, after July’s 0.2 percent rise. Personal spending increased by 0.5 percent, led by purchases of durable goods such as washing machines, dryers, dishwashers, etc. While this suggests consumer are financially healthier than in recent years, we’d prefer to see rises in personal spending more in line or lower than rises in personal incomes.
September’s Consumer Confidence Report from the Conference Board on Tuesday suggests that the consumer acknowledges that they may have gotten a little too sauced in August. Consumer Confidence for September was 86.0 points, down from August’s upwardly revised 93.4 points. September’s number is more in line with our assessments of the past few months and contrary to the Conference Board’s reports. The drag is from the future expectations component. Because of the consumer’s lower future economic expectation, respondents to the survey indicated less interest in future auto and home purchases. While we’re not happy with the lower confidence in the economy’s future, we are happy to see indications of spending constraints. The average American household spends 51 percent of all their income on transportation and housing. Like a matryoshka doll, there’s likely room for savings hidden in that spending.
Wednesday started with ADP’s Employment Report for September, which showed an increase in private employment to 213,000 up from August’s 202,000 reading. The Chiclet on top of that chalupa is that 88,000 of those jobs were added to small business. Once upon a time, small business was the engine that fueled our economy. Increased small business hiring is a sign that the job market and overall economic improvements may no longer be a fairytale. Gallup’s U.S. Job Creation Index for September, also reported on Wednesday, reached a six year high at 30 points and was up 2 from August’s 28 points. This report is the result of worker’s responses that their employer is hiring, rather than not hiring or laying people off. While workers claim their employers are hiring and the ADP report confirms this, they look at the economy’s future like a Skol hangover.
On Thursday, the Challenger Job-Cut report for September came in at its lowest level since June 2000. The 30,477 layoffs in September are considerably lower than August’s 40,010 layoffs. The third quarter total is down slightly from second quarter’s total, which is another good sign. Gallup’s Payroll to Population (P2P) for September was essentially flat at 44.8 percent, down from August’s 44.9 percent. This survey tracks the percentage of the U.S. adult population working 30+ hours a week. Both reports show positivity in the job market.
All our Mean Girls know that the fetchest day of the year concluded the week with the Employment Situation report from the Department of Labor. Non-farm payrolls for September increased by 6,000 and the official unemployment rate dropped to 5.9 percent from August’s 6.1 percent. Hourly wages remained unchanged and hours worked increased slightly to 34.6 hours in September from 34.5 hours in August. All of this is good news, but we remain cautious as the U6 unemployment rate that factors in disengaged workers still hovers around 12 percent and most of the new jobs are crap.
Stick with controlling spending and increasing savings and investments with more cash than you would typically hold. The Fed stops spending $85 billion per month of your money on bonds later this month and no one is entirely sure what to expect. Jobs and wages, though relatively better, are still a concern of ours. It seems from the Consumer Confidence Report, they’re still a concern of yours.
As we’ve said for a long time, manufacturing is where the jobs are. Manufacturing, too, is not your grandfather’s assembly line. Jobs that pay as high as $100,000 can be found with an associate’s degree. That’s great income for anyone, especially someone with zero to minimal student loans.
While we’re happy that Americans may curb future auto spending, the recent past has not been so positive. Unfortunately, most recent sales were in the subprime market. Through June 2014, 29 percent of auto loans for the year were subprime. While not on the scale of the 2008 housing market, there are similarities to what caused the housing bust that same year. Is this déjà vu again?
If you’re one of the Americans who will curb your spending, ponder the minimum amount of money on which you could retire? It’s an important question that should guide most every retirement plan. You may be able to survive on less than you think, which will help your retirement money outlast you.
If you want ideas to survive on less, check out these 31 tips to radically reduce your expenses. To get the biggest bang for your buck when preparing for retirement, pay off your home and cars. As we mentioned above, housing and transportation costs can eat away at savings and investments in retirement, like a drunk girl at Taco Bell.
That’s what we think you need to know to be #moneyconscious. Speaking of moneyconsciousness, we are offering a free copy of our eBook, Do You Know How to Be #MoneyConscious?, to those who sign up for our semi-monthly newsletter. This eBook covers the fundamentals of being money conscious, including understanding your true income and true spending (see above, Personal Income and Outlays). Sign up for our newsletter. We won’t spam you and you’ll see more of the Debt Free Guys.
Lastly, celebrate National Taco Day with this smoky chipotle salsa recipe. It’ll add a little extra pizzazz to your taco.