Registered Investment Adviser Caleb Lawrence
Despite generally disappointing data the major averages enter the final hour mixed. Since Monday the Standard and Poors 500 Index is essentially unchanged while the NASDAQ has gained 70 points or just over 1%.
New home sales missed expectations in May despite a 2.9% gain to 610,000 units annualized sales rate. Month’s supply was unchanged at 5.3 while the median price surged 13.7% to $349,400. On a regional basis sales fell notably in the Northeast and Midwest. Sales increased in the South and particularly so in the West with a 13.3% gain.
Debt levels in the USA began to increase dramatically in the late 70’s and early 80’s partially in response to falling wages but mostly because of changing social mores with respect to debt itself. While allowing many to live far beyond their means excessive debt leads to bankruptcy and foreclosure as was seen following the 2007-2009 financial crisis. A recent piece in Bloomberg noted that Americans are dying with an average debt balance of $61,500 with some 73% going to the grave owing money as per Experian, most of that related to mortgages. Looking at existing debt levels average debt was $132,529 per household. Broken down by category and the average household has $172,806 in mortgage debt, $49,042 in outstanding student loans, another $28,535 in auto loans and last but not least $16,601 in credit card debt. Not all households have all categories of debt which is why the math does not add up. The results of substituting debt for income and reckless speculation brought on by the Fed’s easy money bubble policies. Let’s hope it really is different this time