The Big Four Economic Indicators: November Real Retail Sales
Month-over-month nominal sales in November increased by 0.2% (0.19% to two decimal points). Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, decreased by 0.1% (0.07% to two decimal points).
ECRI Weekly Leading Index Update
This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 145.9, down 1.9 from the previous week. Year-over-year the four-week moving average of the indicator is now at 1.23%, down from last week. The WLI Growth indicator is now at 2.23, also down from the previous week.
Retail Sales: Up 0.19% in November
The Census Bureau's Advance Retail Sales Report for November was released this morning. Headline sales came in at 0.19% month-over-month to one decimal and was below the Investing.com forecast of 0.5%. Core sales (ex Autos) came in at 0.12% MoM (to two decimals).
Household Incomes: The Value of Higher Education
What is the value of education for household income? The Census Bureau's annual survey data for 2018 published in September gives us some interesting insights into this question. The median income for all households with a householder age 25 and older was $64,761. The chart below shows the median annual household income for nine cohorts by educational attainment. We've rounded the data points to the nearest $100, e.g. $64.8K for all households age 25 and older.
Household Incomes: The Decline of the "Middle Class" 2018 Update
The median household is the statistical center of the Middle Class. In terms of income, this class has not gained much in recent decades. Let's take a closer look at a troubling aspect of the Census Bureau's latest annual household income data, issued in September. In this update, we'll focus on the growing gap between the median (middle) and mean (average) household incomes across the complete time frame of the Census Bureau's annual reporting, which began in 1967, to the release of the annual data for 2018.
November Producer Price Index: Core Final Demand Unchanged MoM
Today's release of the November Producer Price Index (PPI) for Final Demand was unchanged month-over-month seasonally adjusted, down from 0.4% last month. It is at 1.1% year-over-year, unchanged from last month, on a non-seasonally adjusted basis. Core Final Demand (less food and energy) came in at -0.2% MoM, down from 0.3% the previous month and is up 1.3% YoY NSA. Investing.com MoM consensus forecasts were for 0.2% headline and 0.2% core.
Inflation: An X-Ray View of the Components
Here is a table showing the annualized change in Headline and Core CPI, not seasonally adjusted, for each of the past six months. Also included are the eight components of Headline CPI and a separate entry for Energy, which is a collection of sub-indexes in Housing and Transportation. We can make some inferences about how inflation is impacting our personal expenses depending on our relative exposure to the individual components.
What Inflation Means to You: Inside the Consumer Price Index
Let's do some analysis of the Consumer Price Index, the best-known measure of inflation. The Bureau of Labor Statistics (BLS) divides all expenditures into eight categories and assigns a relative size to each. The pie chart illustrates the components of the Consumer Price Index for Urban Consumers, the CPI-U.
Consumer Price Index: November Headline at 2.05%
The Bureau of Labor Statistics released the November Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.05%, up from 1.76% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.32%, up slightly from the previous month's 2.31% and above the Fed's 2% PCE target.
Median Household Incomes by Age Bracket: 1967-2018
We have updated our commentary on household income distribution to include the Census Bureau's release of the 2018 annual data. Our focus was on arithmetic mean (average) household incomes by quintile (and the top 5%) over the 50+ year history of this data series. The analysis offered some fascinating insights into U.S. household incomes. But the classification misses the implications of age for income. Households are by no means locked into the same quintile over time.
Weekly Gasoline Price Update: WTIC Up 5.5% From Last Week
The price of Regular and Premium are down one and two cents each, respectively, from last week. According to GasBuddy.com, California has the highest average price for Regular at $3.68 and Oklahoma has the cheapest at $2.18. The WTIC end of day spot price closed at 59.02, up 5.5% from last week and a 22% increase since the beginning of the year.
World Markets Update
All eight indexes on our world watch list posted gains through December 9, 2019. The top performer is our own S&P 500 with a gain of 25.64% and in second is France's CAC 40 with a gain of 26.65%. In third is Germany's DAXK with a gain of 21.71%. Coming in last is Hong Kong's Hang Seng with a gain of 5.43%.
Long-Term Trends in Employment by Age Group
The Labor Force Participation Rate (LFPR) is a simple computation: You take the Civilian Labor Force (people age 16 and over employed or seeking employment) and divide it by the Civilian Noninstitutional Population (those 16 and over not in the military and or committed to an institution).
Multiple Jobholders: Over Two Decades of Trends as of November
At present, multiple jobholders account for just 5.2 percent of civilian employment. The survey captures data for four subcategories of the multi-job workforce, the current relative sizes of which we've illustrated in a pie chart.
The Big Four Economic Indicators: November Nonfarm Employment
This commentary has been updated to include Friday morning's release of Nonfarm Employment. November's 266K increase in total nonfarm payrolls had revisions that resulted in 41K more jobs than previously reported. The Investing.com consensus was for 186K new jobs and the unemployment rate to remain at 3.6%.
A Perspective on Secular Bull and Bear Markets
Was the March 2009 low the end of a secular bear market and the beginning of a secular bull? At this point, over ten years later, the S&P 500 has set a series of inflation-adjusted record highs based on monthly averages of daily closes.
October Trade Deficit at $47.20B
The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 199 and details U.S. exports and imports of goods and services. Today's headline number of -47.20B was slightly higher than the Investing.com forecast of -48.70B.
A Closer Look at Today's ADP Employment Report
In this morning's ADP employment report we got the November estimate of 67K new nonfarm private employment jobs from ADP, a decrease over October's revised 121K. The popular spin on this indicator is as a preview to the monthly jobs report from the Bureau of Labor Statistics.
ISM Non-Manufacturing: Slower Growth in November
The Institute of Supply Management (ISM) has now released the November Non-Manufacturing Purchasing Managers' Index (PMI), also known as the ISM Services PMI. The headline Composite Index is at 53.9 percent, down 0.8 from 54.7 last month. Today's number came in below the Investing.com forecast of 54.5 percent.
The Latest Look at the Total Return Roller Coaster
Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $15,604 for an annualized real return of 8.93%.
Market Remains Overvalued
Here is a summary of the four market valuation indicators we update on a monthly basis.
- The Crestmont Research P/E Ratio
- The cyclical P/E ratio using the trailing 10-year earnings as the divisor
- The Q Ratio, which is the total price of the market divided by its replacement cost
- The relationship of the S&P Composite price to a regression trendline
Market Valuation, Inflation and Treasury Yields: Clues from the Past
Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a "normal" market environment -- one with conventional business cycles, Federal Reserve policy, interest rates and inflation -- current valuation levels would be a serious concern.
But these are different times.
Market Cap to GDP: An Updated Look at the Buffett Valuation Indicator
With the Q3 GDP Second Estimate and the November close data, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 144.6%, up from 142.1% the previous quarter.
Regression to Trend: Another Look at Long-Term Market Performance
Quick take: At the end of November the inflation-adjusted S&P 500 index price was 125% above its long-term trend, up from 116% the previous month.
About the only certainty in the stock market is that, over the long haul, over performance turns into underperformance and vice versa. Is there a pattern to this movement? Let's apply some simple regression analysis to the question.
ISM Manufacturing Index: Down 0.2 in November
Today the Institute for Supply Management published its monthly Manufacturing Report for November. The latest headline Purchasing Managers Index (PMI) was 48.1, a decrease of 0.2 percent from 48.3 the previous month. Today's headline number was below the Investing.com forecast of 49.2 percent.