Oct 2018 Economic Update

The U.S. economy added 134,000 jobs in September, but wages grew at a lower pace over the past rolling 12 months. Wages were also up only 1.0% compared with a year earlier. Eighteen states so far in 2018 have raised their minimum wage… which helped consumer earnings this year. The net result of the ‘Obama+Trump’ presidential eras (2008 until now) is that wage growth has been up, but consumer savings has fallen to an 25-year low. Today it is at 2.4% (Source: US Commerce Dept.). In January of 1993, that figure was 10.6 percent.
Currently, the unemployment rate is about 3.7 %, the lowest since 2000. Since the Great Recession, (ended late 2009 with unemployment at 11%), the economy has added jobs consistently over much of that time period (monthly basis). Arguably, this is the longest streak on record.

For years, employers have increasingly said they can’t find skilled workers for highly technical, scientific and other careers requiring extensive education and training (e.g. CPAs), which has changed only slightly over the past 6 years. Therefore, the consensus is that much of these numbers, mentioned above, are unskilled workers that may only be earning enough to survive, and with no ability to save money. It is estimated that over 12 percent of the average consumer’s paycheck is used on discretionary spending (non-essentials), and that figure is growing consistently. Generally speaking, folks have the same false sense of security and wealth as they have always had before huge market crashes.

I project GDP to rise by only 1.5 percent in 2019 compared to 3.3 percent for 2018. I feel any increase in disposable income though, will be partially offset by the continuance of rising home and food prices. Because of the ongoing turmoil or war in or around oil producing nations, I project oil prices to continue doing what they have done over the past year (increase), translating to higher gasoline prices for you and me.

For the final quarter of 2018, the Federal Reserve may continue raising rates, perhaps 1 more time this year, which of course will trigger a boost in overall inflation. American investors certainly see more rate increases on the horizon, as they have tightened their wallets and are investing and saving less. Call (208) 407-0185 to avoid getting caught in this trap.

Some economists feel that economic growth is expected to stagnate and maybe decline by the second half of 2019, and a moderate to strong recession will begin. This is the result of many factors, but a few relate to rising interest rates, slowing construction activity, and declines in corporate earnings, and slowly rising oil prices.
My fears continue regarding almost 9 and a half straight years of stock market growth. I must say we are well overdue for a stock market crash to the tune of over 45%… probably by Mid-2019

As of this writing: “Light” Crude Oil has increased in prices (US) per barrel to $70.20, up strongly from $50.70 a year ago. During the same time period, Gold bullion has slightly increased in per ounce prices to $1,270 ($1,167 a year ago). Silver bullion has also increased slightly to $14.68 per ounce ($13.97 a year ago).

Lastly, the most popular Crypto-currency ‘Bitcoin’ is now being priced at under $6,525 per coin, still signaling a strong crash, slightly more than 58% down since its highest point of over $19,000 in December of 2017. Many confused and frustrated small investors have since left the market. Most experts however project a return to over $19K per coin by the end of 2019.

2018 Economic Update

As a service to friends and valued long-term clients, Retirement Portfolio Management provides periodic economic updates to keep the public informed and help many to make sound business and personal decisions.

As of the June 1st, 2018

The U.S. economy added 178,000 jobs in May, and wages grew at a moderate pace over the past rolling 12 months. Wages were also up 3.0% compared with a year earlier, which is at the best pace since Mid-2009. Eighteen states so far in 2018 have raised their minimum wage… which helped overall wages grow.

Currently, the unemployment rate is about 4.0 %, the lowest since 2000. Since the Great Recession, (ended late 2009 with unemployment at 10-11%), the economy has added jobs consistently over the majority of that time period (monthly basis). Arguably, this is the longest streak on record.

For years, employers have increasingly said they can’t find skilled workers for highly technical, scientific and other careers requiring extensive education and training, which has changed only slightly over the past 5-6 years. Therefore, the consensus is that much of these numbers, mentioned above (4% unemployment rate and 178,000 jobs added), are unskilled workers that that may only be earning enough to survive, and with no ability to save money.

Some economists anticipate that the new tax law will continue to boost wages, because large corporations are giving their workers raises. One-time bonuses, which many other companies have given out, are not counted in the wage growth calculation.

I project GDP to rise by only 2 percent in 2018 compared to 2.3 percent for 2017. I feel any increase in disposable income though, will be partially offset by the continuance of rising home and food prices. Because of the ongoing turmoil or war in or around oil producing nations, I project oil prices to continue doing what they have done over the past year (increase), translating to higher gasoline prices for you and me.

For the final 2 quarters of 2018, the Federal Reserve plans to continue raising rates at a slow pace, perhaps 2 more times this year, which of course will trigger a boost in overall inflation. American investors certainly see more rate increases on the horizon, they have tightened their wallets and are spending less on luxury items (disposable income).

Some economist feel that economic growth is expected to decline by the last quarter 2018, as a result of slowing construction activity and slowly rising interest rates, …which spills over to higher priced consumer goods and services, such as utilities.

My fears still continue regarding almost 9 straight years of stock market growth. I must say we are well overdue for a stock market drop to the tune of over 45%… probably by the end of this year.

As of this writing: Crude Oil has increased in prices (WTI) per barrel to $66.80. During the same time, Gold bullion has decreased in per ounce price to $1,320 over the past 6 months.
Lastly, the most popular Crypto-currency ‘BitCoin’ is now being priced at under $8,000 per coin, still signalling a strong crash, slightly more than 58% down this year (2018). Many confused and frustrated small investors have since left the market. Most experts however project a return to over $19K per coin by the end of 2019.

Economic Update

As a service to friends and valued long-term clients, Retirement Portfolio Management provides periodic economic updates to keep the public informed and help many to make sound business and personal decisions.

As of the 2nd week of February, 2018

The U.S. economy added 200,000 jobs in January, and wages grew at the fastest pace in eight years. Wages were up 2.9% compared with a year earlier, which is at the best pace since June 2009. Several states also raised their minimum wage at the start of the year, which helped overall wages grow.

Since December 2017, the unemployment rate stayed at 4.1%, the lowest since 2000. Since the Great Recession, (ended late 2009 with unemployment at 10-11%), the economy has added jobs for 88 consecutive months. This is the longest streak on record.

For years, employers have increasingly said they can’t find skilled workers for highly technical, scientific and other careers requiring extensive education and training, which has changed only slightly over the past 5 years. Therefore, the consensus is that much of these numbers, mentioned above (4.1% unemployment rate and 200,000 jobs added in January), are unskilled workers,

Some economists anticipate that the Republican tax law will continue to boost wages, because large corporations are giving their workers raises. One-time bonuses, which many other companies have given out, are not counted in the wage growth calculation. Tax cuts passed by Congress will provide an additional boost to the US economy this year.

I project GDP to rise by 2.8 percent in 2018 compared to 2.3 percent for 2017. The increase in disposable income though, will be partially offset by the continuance of rising home prices. Because of the new tax law, repatriation of business profits will raise dividend payments, some of which will also end up as consumption because of increased investor income.

For the final 3 quarters of 2018, the Federal Reserve plans to continue raising rates at a modest pace, perhaps three times this year, which of course will trigger faster inflation. American investors certainly see more rate increases on the horizon. The yield on the 10-year U.S. bond shot up to 2.84% after the jobs report, reflecting higher expectations of more rate hikes.

Some economist feel that economic growth is expected to decline by the 2nd quarter as a result of slowing construction activity and slowly rising interest rates, …which spill over to higher priced consumer goods and services (inflationary).

My fears still continue regarding the 8th straight year of stock market growth. I must say we are well overdue for a stock market drop to the tune of over 45%.

Since the end of 2017, Crude Oil has increased in prices almost $10 per barrel to $65.50. During the same period of time (past 45 days), Gold bullion has increased in per ounce price from $1250 to $1340 (7%).
Lastly, the most popular cryptocurrency ‘BitCoin’ ended 2017 at over $19,000 per coin, but by mid-February 2018, crashed by over 50% to below $9,000. Many confused and frustrated small investors have since left the market. Most experts however project a return to over $19K per coin by the end of 2018.