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.