Registered Investment Adviser Caleb Lawrence
Despite generally negative economic data and 2 more bank failures in Europe the major averages managed to recover most of their early losses to enter the final hour about even.
The Chicago Fed National Activity Index fell .75 point to -.26 in May on weakness in production, employment, consumer spending and housing. The lone standout was sales, orders and inventory that managed a fractional gain. The 3-month moving average fell sharply down .17 to .04 as this series continues to show very lackluster performance.
Durable Goods Orders missed again in May with a second negative reading falling .4% to -1.1%. Nondefense capital goods ex aircraft, the proxy for business spending slipped .2% for the month, its first negative reading since December of last year. A volatile series so this isn’t as bad as some might think, just yet, will wait and see what happens next month.
When Seattle voted to increase the cities, minimum wage beginning in April of 2015 in a stepped fashion all sorts of dire predictions were made. One was that low paid jobs would disappear along with the businesses that supply them, or see sharply reduced hours. The other side figured that it would produce rising living standards, greater spending, and increased tax revenues. The first Dollar per hour increase in April 2015 had little measurable effect one way or the other. The second occurred in 2016 and a year later the results are in and unlike 2015 the effects are significantly negative. Hours worked by those affected fell by 3.5 million per quarter or 14 million during the second year. Aside from substantial employment losses those that remained employed saw wages fall by $125 per month despite the raise. While some flaws were noted in the study it seems to paint a fairly unambiguous picture indicating that the proposal failed materially to produce the desired results.