The ISM Non-Manufacturing Index helps determine the overall economic strength of the services sector. Components evaluated are employment, business activity, new orders, and supplier deliveries; which are then compiled into an index. The non-manufacturing sector represents a much larger share of the overall U.S. economy when compared to the manufacturing sector, making up approximately 80%; the sector’s economic weight makes …
International Trade Balance
The US international trade balance is compiled by America’s Customs Agency and represents the value of all goods traded between the US and foreign nations. The balance is the calculated by subtracting total imports from total exports. A negative balance means that imports are more than exports, a positive trade balance means that exports are greater than imports. The international …
ISM Manufacturing Index
The ISM Manufacturing Index is derived from a survey of purchasing managers and their outlook on overall conditions by looking at factors such as orders for durable goods, industrial production and hiring. It gives a general direction rather than the specific strength of the factory sector and manufacturing activity in the U.S. A reading above 50 is an indicator that …
Retirement Account Contributions
The IRS announced that contribution limits on 401(k)s and other qualified retirement accounts will be increasing slightly in 2020. The new deferral limit for individuals under the age of 50 is $19,500, which is an increase of $500 from 2019. The catch-up for individuals over age 50 will be $6,500 ($6,000 / 2019). The total contribution limit (employee and employer …
Producer Price Index
The Producer Price Index (PPI) looks at the average change in selling prices from the viewpoint of domestic producers of both goods and services. Three areas of production are observed: industry-based, commodity-based and commodity-based final demand-intermediate demand. Investors look to the producer price index, which is a more relevant way of gauging inflation than CPI because of the large basket …
Change in Nonfarm Payrolls
Nonfarm payrolls give an overview of the overall employment outlook of the US economy; nonfarm payrolls do not include those employed in agriculture because of the seasonal nature of their work. This report obtains these numbers from 142,000 businesses and government agencies to track the new jobs added in non-farming sectors of the economy. In October, the unemployment rate is …
ISM Manufacturing Index
The ISM Manufacturing Index is derived from a survey of purchasing managers and their outlook on overall conditions by looking at factors such as orders for durable goods, industrial production and hiring. It gives a general direction rather than the specific strength of the factory sector and manufacturing activity in the U.S. A reading above 50 is an indicator that …
Retail Sales
Retail Sales are the total amount of merchandise and related services sold to consumers. It is considered a sign of strength of U.S. Consumer spending, which accounts for roughly two-thirds of the economy. This indicator also provides insight into which areas of the retail space are experiencing strong sales, such as auto sales. Retail sales excluding food fell by .3% …
Housing Starts
Housing starts track the number of new residential construction projects underway over the course of a month. This indicator has implications for demand in construction spending/jobs, consumer wages, and complimentary sectors such as durable household item sales. Along with building permits, housing starts is considered a leading economic indicator. Housing starts fell in September by 9.4% to an annualized rate …
Capital Utilization
Total capacity utilization measures the percentage of total economic output that is being utilized. It is compiled from physical data from trade and government sources, as well as from survey data from the census when physical data is not available. A high rate of total capacity utilization is an indicator of inflation as an economy nears its maximum level of output. Low capacity utilization makes …
Change in Nonfarm Payrolls
Nonfarm payrolls give an overview of the overall employment outlook of the US economy; nonfarm payrolls do not include those employed in agriculture because of the seasonal nature of their work. This report obtains these numbers from 142,000 businesses and government agencies to track the new jobs added in non-farming sectors of the economy. The unemployment rate is at 3.5%, …
ISM Non-Manufacturing Index
The ISM Non-Manufacturing Index helps determine the overall economic strength of the services sector. Components evaluated are employment, business activity, new orders, and supplier deliveries; which are then compiled into an index. The nonmanufacturing sector represents a much larger share of the overall U.S. economy when compared to the manufacturing sector, making up approximately 80%; the sector’s economic weight makes …
The SECURE Act
The Setting Every Community Up for Retirement Enhancement Act of 2019, better known as The SECURE Act, is a retirement security package under debate in Congress. Currently, the bill is stalled in the Senate after passing through the House of Representatives in May 2019. Among the changes to retirement plans and 529 plans, two of the more notable changes, if …
ISM Manufacturing Index
The ISM Manufacturing Index is derived from a survey of purchasing managers and their outlook on overall conditions by looking at factors such as orders for durable goods, industrial production and hiring. It gives a general direction rather than the specific strength of the factory sector and manufacturing activity in the U.S. A reading above 50 is an indicator that …
Borrowing on Margin
In the event of a large cash need, the decision to liquidate investments to raise cash to cover or the use of financing usually comes down to the cost of capital (expected rate of return from the investments vs. the cost of borrowing). There are, however, tax implications for some financing, such as the ability to deduct certain interest from …
The Market is Not Always Rational
When the market goes up, it is said, it takes the stairs; when the market goes down, it takes the elevator. Today’s market performance was a result of the President’s tweet indicating that he will add an additional 10% to $300 billion in imports from China. We quickly do the calculation and figure that adds up to $30 billion. (How …
ISM Non-Manufacturing Index
The ISM Non-Manufacturing Index helps determine the overall economic strength of the services sector. Components evaluated are employment, business activity, new orders, and supplier deliveries; which are then compiled into an index. The nonmanufacturing sector represents a much larger share of the overall U.S. economy when compared to the manufacturing sector, making up approximately 80%; the sector’s economic weight makes …
New Home Sales
New single-family home sales represent the number of brand-new houses that were purchased or committed to being purchased over the course of a month. Data pertaining new home sales is collected from the Selling Office Commission and local building permit offices assuming that new houses built are being built to sell. This indicator has a trickle-down effect as demand rises …
Consumer Spending and Personal Income
Consumer spending, measured by Personal Consumption Expenditures (PCE), makes up approximately two-thirds of the economy and is a direct measure of purchasing activity. PCE is a reliable indication of inflation because it is calculated from data acquired directly from the GDP report and businesses. We see where consumers are spending their dollars, whether it be durable and nondurable goods, or …
Architecture Billings Index
The Architecture Billings Index (ABI) is an indicator for commercial and industrial building activity. The Work-on-the-Boards survey is given to architecture firms each month to report how billing activity performed in the previous month. The ABI is a reliable tool for firms to track architectural movements in the market. Readings above 50 indicates rising levels of construction for non-residential buildings …
Global Interest Rates
While the market seems to be on a rocket ride this year, we may want to move back a little bit and take a look at the market over the past two years. Frequently we look at and are told about the market’s Year-to-Date return. In 2019, it looks fantastic. Who can complain about a 20% plus return in the …
Total Capacity Utilization
Total capacity utilization measures the percentage of total economic output that is being utilized. A high rate of total capacity utilization is an indicator of inflation as an economy nears its maximum level of output. Low capacity utilization makes it difficult to stimulate the economy because incentives for increasing production that the government provides are often unable to reach many producers, this is because of the limited number …
Retail Sales (Excluding Foods)
Retail Sales are the total amount of merchandise and related services sold to consumers. It is considered a sign of strength of U.S. Consumer spending, which accounts for roughly two-thirds of the economy. This indicator also provides insight into which areas of the retail space are experiencing strong sales, such as auto sales. Retail sales excluding food rose to 0.36% …
ISM Manufacturing Index
The ISM Manufacturing Index is derived from a survey of purchasing managers and their outlook on overall conditions by looking at factors such as orders for durable goods, industrial production and hiring. It gives a general direction rather than the specific strength of the factory sector and manufacturing activity in the U.S. A reading above 50 is an indicator that …
Federal Reserve
Yesterday the Federal Reserve gave us an idea of what they were thinking for 2019. The market does not like it and is showing it with its actions. It is my opinion, that both the market and the Federal Reserve are wrong. Let me explain. The Federal Reserve has a dual mandate; full employment and price stability. As the chart …
Increased Contributions Limits
The IRS announced cost of living adjustments in the contribution limits to popular retirement savings accounts for 2019. The limit allowed to be contributed by employees to a 401(k), 403(b), Thrift Savings Plans, and 457 plans for 2019 increased from $18,500 to $19,000. Participants over the age of 50 can contribute an additional $6,000 (unchanged from 2018). Contribution limits to …
Back-Door Roth Contributions
Because of the nature of tax-free growth and distributions, Roth IRAs are one of the more valuable savings tools available. The one major hurdle to these accounts is the income limitation when making direct contributions. In 2018, for single filers contributions to a Roth IRA are phased out for people with Modified Adjusted Gross Income (MAGI) above $120,000 and completely …
529 Education Savings Plan
Under the Tax Cuts and Jobs Act of 2017, the new law expanded the definition of qualified distributions for a 529 plan. Under previous law, qualified distributions were distributions for tuition, books, room & board, fees and supplies for higher education. Qualified distributions were tax-free at the federal and state level and avoided a 10% federal penalty. With the tax …
Pay Increases in Other Forms
A key measure many economists look to in determining the health of the labor market is wage growth. As employment rises and the job market becomes more competitive, people look for higher paying jobs and an increase in wages. What many people fail to recognize in terms of wage growth are the pay increases they receive that do not come …
Social Networking Use Among Adults
As we look back on how rapidly our world has changed over the years we certainly have to look at social media usage. Social media is primarily a way of exchanging and communicating information and opinions. In the figure below, we look at the percentage of social media users between certain age ranges. It should come as no surprise that …
Did Your Babysitter Make the Nice List?
With the holiday season in full swing and sales poised to set another record, some might wonder how this money is being spent. Although not shown in the graph, family members benefit the most, with people devoting the majority of their holiday budget to gifts on family members. Money spent on items such as cards, flowers, and decorations has remained …
Falling Behind
It should come as no surprise that delinquencies on student loans have been on the rise given the dramatic increase in student loan debt outstanding. As we can see from the graph below, the delinquency rate on student loan debt is now more than the rate on credit cards and mortgages and has been increasing since before the recession. A large portion …
Income Gaps: It’s About Who You Work For
As the never-ending debate regarding income inequality remains at a gridlock, perhaps it’s time to shift our focus from an individual and consumer level, to a company level. As we can see from the first graph in the series of graphs below, the 90th percentile of the largest 500 companies have increased their market share dramatically. While we have seen …
Investing in the Government for Big Returns
Imagine having an investment portfolio in which you contribute $500 every month, like it is taken straight from your paycheck. Now, throughout the course of the year, this portfolio grows 450% to a total value of $33,400. That’s something to brag about! These are the numbers from the bottom 20% of tax filer’s net income tax rate. On average, the …
The Middle Class is Growing
As the political season has begun and the debates are heating up, we have heard more and more about the mystery of a vanishing ‘Middle Class’. Though we have yet to hear who or what is defined as the ‘Middle Class’, we have been sufficiently reassured that it is both incredibly important and that the state of our economy rests …
Are Businesses the New Banks?
More than half of all cash on the books at corporations is invested in investment grade corporate bonds. The record high comes from the decreased investments in US Treasurys, commercial paper, and CDs. Money market funds are becoming less attractive due to new SEC rules and deposits are tougher on banks due to the banking rules of the Federal Reserve. …