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Caleb Lawrence – KPIG-KPYG Radio – Share the Wealth – January 30, 2017

The current administration’s controversial executive orders riling the hearts and minds across the spectrum spooking business owners, and the markets as they begin the week with noticeable losses. The Dallas Fed manufacturing index increased 4.4 points to an impressive 22.1 in January to hit a 6-year high on strength in new orders, shipments, and employment.

Personal Income gained .3% in December, slightly below expectations led by strength in the earned variety’s. On a year ago basis personal income advanced 3.5% a decent figure but the trend is slowing as the recent gains look increasingly transitory and not the beginning of a trend as had been hoped. The Personal Consumption Expenditures Price Index increased .2% for the month and 1.6% from a year ago, below the Fed’s desired 2% price gain target.

With the official Federal deficit at 20-Trillion Dollars and the Dow Jones Industrial average breaking 20,000 last week we have a few more items to add to the list of things that just don’t seem to matter. The Dow’s rise to 20,000 occurred on the back of largely flat revenue growth over the last 6-years for the 30 component companies despite some notable index changes, mergers, and acquisitions. In fact projected 2016 revenues of $2.69 trillion will be 4.4% below 2011 and represent the worst year since 2010 should estimates hold with 4 companies still to report. Many would point to the oil companies as the primary culprit for the declining earnings and indeed they did have an impact but their revenues started falling back in 2012. Like the Standard and Poors 500 companies that have also struggled to produce revenue growth of late as well, could it be that the deflationary credit bust of 2007-2009 has crimped end user demand, despite a sub 5% unemployment rate, emergency level interest rates along with record student and auto loan debt?

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