Spring 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 make sound business and personal property decisions.

The US economy’s remarkably steady job-creation sputtered in February 2019 and produced a mere 20,000 jobs. It was the smallest gain in well over a year and came on top of other signs that the economy is off to a sluggish start in 2019 and may have a looming Recession in store.

Wages were up about 1.3% compared with a year earlier. The average base-pay for a full-time worker increased to $52,750, and consumer savings has risen to 7.5% (Source: US Bureau of Economic Analysis). Folks are debt burdened and saving more instead of investing in Capital items or large ticket products. College graduates within the past 10 years make up a large group of those holding onto their cash and not buying homes.

Currently, the unemployment rate is about 3.8 %, which is almost the lowest since 2000 (Source: Trading Economics). 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. Database Programmers or CPAs), which has changed only slightly over the past 6 years. Therefore, the consensus is that much of these low unemployment numbers, mentioned above, are unskilled workers that may only be earning enough to survive (earning much less than the national average of almost $53K).

Year over year (rolling 12 months) showed consumer discretionary spending (non-essentials) to be growing slightly at 3%. Generally speaking, folks have the same false sense of security and wealth as they have always had before huge market crashes in the past like 2008. The current level of inflation is now at 2.2%, but unfortunately because unemployment is so low, the Federal Reserve (The FED) continues to slowly raise interest rates.

This has put a damper lately on new home ‘starts’ and existing home sales. I predict Land and Real Property values will eventually suffer by the end of the summer this year (2019) because inflation will begin to increase based on Fed policy. Older American investors certainly feel more interest 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.

Because of the ongoing turmoil or war in and 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. Purchasing crude oil investments in my opinion is a somewhat good idea with the average barrel of crude still only about $62 (up over 27% this year).

Some economists feel that economic growth is expected to stagnate and maybe decline by the 3rd quarter 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, declines in corporate earnings, and slowly rising oil prices.

My fears continue regarding almost 10 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 Late-2019

As of this writing: 2019 Gold bullion has slightly increased in per ounce prices to $1,290 ($1,280 in January 2019). Silver bullion has remained constant at $15.20 per ounce (break-even compared to January).

Lastly, the most popular Crypto-currency ‘Bitcoin’ is now being priced at under $5,225 per coin, still signaling a strong crash, slightly more than 75% 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.