Registered Investment Adviser Caleb Lawrence
The major averages enter the final hour with small gains on little real news though the season of the witch hunt continues. Last Friday’s employment report contained some attention-grabbing headlines but the details, as is common with economic reports, contained some glaring inconsistences in addition to the labor force participation rates and the numbers of Americans gainfully employed and paying taxes. Some reports Personal Income and such show wage gains in the last year or two being fairly robust and running some 3% annualized. The Bureau of Labor Statistics or BLS reports that real or inflation adjusted wages increased 1.5% in the last 2-years. Over the same period those employed increased by 5.7 million or 3.9%. Yet payroll taxes went up just 3% and the workweek slipped fractionally over the same period. Again, the numbers just don’t quite add up. Credit card and revolving debt based on federal Reserve Data increased by 20% from early 2015 until today. If things were as great as the official 4.1% unemployment rate indicated why the ballooning credit card balances, not to mention the student and auto loan data? This last item auto sales, has been the real driver of consumer debt as the record high retail bankruptcies in 2017 imply that credit cards are not so much being pulled out at the shopping malls as they are being used for basic expenses. The precarious state of your average Americans finances is also underscored by the homelessness epidemic and numerous reports showing that the majority of folks can’t afford a $1,000 emergency with 69% of the population living hand to mouth. The frequent logical disconnects in the data beg the question just how strong is this recovery? My suspicion is that for a lot of folks the recovery may exist in the headlines, but it doesn’t seem to make it down to their bottom line.