Sharkey, Howes & Javer

Inside the Economy: Consumer Spending and Inflation

This week on “Inside the Economy”, we discuss the increase in consumer spending and the uptick in inflation. Inflation has seen a small increase, mainly driven from the current energy sector. There has been an increase in consumer spending, with the fastest pace of consumer spending on record this past March. The question is, will it continue and where is the money coming from? Personal savings has continued to grow to all-time highs as people continue to wait to spend money on travel, entertainment, etc. Tune in to learn about all this and more!

Key Takeaways:

• U.S. Retail Sales rise at second fastest pace on record
• Headline CPI grows higher, driven by energy, yet remains below 2%
• Personal savings continue to grow to all-time highs
• Earnings and profits drive stock market higher

Inside the Economy: Increased Inflation and the Housing Market

This week on “Inside the Economy”, we discuss the recent change in inflation and the current housing market. There has been a boost in headline inflation, driven by rising fuel prices and increased travel. Is this trend here to stay or is it a temporary reaction? Personal savings grew over the last year, but consumers are looking to make up for lost time with increased spending in 2021. Low housing inventory is driving up prices, but which sector of the housing market has the lowest supply? Tune in to learn about this and more!

Key Takeaways:

• Retail Sales hit a new high after a year of increased savings
• Headline CPI grows higher, driven by fuel prices, while Core CPI stays under 2%
• Gasoline supply returns to pre-pandemic levels as travel improves
• Sparce inventory in low-income housing has driven up prices, while interest rates remain low
• State and local tax revenue continued to grow in 2020, despite the pandemic

Inside the Economy: The Plan for Spending and Excessive Savings

This week on “Inside the Economy”, we examine the future of individual and government spending. Personal income has seen a boost in the last year, thanks to unemployment benefits and government stimulus. President Biden has released details for a $2 trillion dollar infrastructure plan. Where does he plan to spend the most money? Which tech giant has added over half a million jobs in the last year? Tune in to hear about all of this and more!

Key Takeaways:

• GDP numbers continue to slowly increase
• Biden’s Infrastructure plan includes spending $620 billion on transportation, with a large allotment to electric vehicles
• Corporate profits continue to grow
• In the last year, Amazon hired more employees than 136 other top companies combined
• Corporate taxes are relatively low, but most likely will see an increase

Inside the Economy: Interest Rates and the Inflation Boogeyman

This week on “Inside the Economy”, we discuss the current interest rate environment and fears of inflation. The 10 year treasury has continued to rise forcing bond prices lower. Where will the 10 year yield end up? Fears around inflation may be outweighing reality. The yield curve is steepening, but what does that mean? Will the new administration be able to close the funding gap? Tune in to find out more!

Key Takeaways:

• Oil prices remain steady
• Unemployment continues to trend in the right direction
• The housing market is still robust
• New business applications are on the rise

Inside the Economy: Debt Absorption and Rising Rates

This week on “Inside the Economy”, we take a look at the nation’s debt levels and the direction of interest rates. The recent movement in Congress on another stimulus package will add another $1.9 trillion to the nation’s debt. Are these debt levels sustainable? What’s the impact of the debt and will it be manageable when interest rates rise? The stock market has experienced recent volatility, specifically in the tech sector. Where will the index be at the end of 2021? Tune in to find out more!

Key Takeaways:

• Current stimulus package is around 9% of GDP
• Personal Income continues to rise due to stimulus checks
• Oil prices reach mid $60s
• Unemployment continues to decline

Inside the Economy: Inflation Status and the Bond Market

This week on “Inside the Economy”, we examine the state of inflation and the future of the bond market. The yield curve continues to normalize as long-term interest rates slowly creep up. Overall inflation has stayed low, but there are sectors that have seen major price inflation. We are still in the midst of a bull market; how do the last 11 months compare to previous bull markets? Investment-grade bonds were a place of comfort during a volatile year, but has that changed in 2021? Tune in to learn more!

Key Take-aways:

• Textbooks and college tuition led price inflation from 1996-2006
• As industrial and manufacturing production return to pre-pandemic levels, so does U.S. imports and exports
• The current bull market is up 75% from the low in March, the second largest bull market return
• Leveraged loans and high-yield debt start the year off strong
• Paying off all student debt would cost $1.5 trillion

Inside the Economy: The U.S. Consumer and Interest Rates

This week on “Inside the Economy”, we discuss the recovery of consumer spending. Since the start of the pandemic, consumer spending is trending up and credit card balances are trending down. Will this continue in 2021 and what impact will it have on GDP? The Federal Reserve expects to keep rates low for at least 12-18 months. As the Fed continues to buy debt, what will that do to the yield curve and treasury markets? Tune in to find out more!

Key Takeaways:

• Oil prices are steadily increasing. 
• Fourth quarter GDP estimates are around 4%, we expect it to be revised higher. 
• 30-year mortgages are still under 3%.
• Unemployment steadily declines.

Inside the Economy: Where the Money is Spent and Saved

This week on “Inside the Economy”, we examine where U.S. citizens and the government are spending money.  As the end of year numbers start to roll in, it looks like consumers did not hold back when it came to holiday spending. Part of that spending included an increase in imported goods, but one import is being left behind as the U.S. produces more stateside. Many public companies are sitting on a plethora of cash, but what about Americans and non-profits? The value of real estate continues to increase, but are the trends far off from what we have seen historically? Tune in to learn about this and more!

Key Takeaways:

• We are importing more goods than ever, but less petroleum
• Americans still have trillions of dollars sitting in savings accounts
• Household asset values continue to climb, a lot in thanks to real estate values
• Manufacturing has almost returned to pre-pandemic levels
• The U.S. dollar is at its lowest point since 2018

Inside the Economy: Economic Data for the New Year

This week on “Inside the Economy”, we look at the start of 2021 in terms of economic data. Unemployment holds steady around 6.7%. Manufacturing data continues to expand and improve. Oil prices break $50 to start the year. What impacts will Saudi Arabia and Russia have on the oil markets in 2021? Government debt continues to pile up. What are the risks and is it a problem? State revenues are looking better than projected. Will there be another stimulus? Tune in to find out. 

Key Takeaways:

• Annual Hiring is picking up
• Oil prices break $50
• The Federal Deficit continues to climb
• Inflation is still muted, but treasury yields are creeping higher.

Inside the Economy: Overdue Rent and the First Wave of Debt

This week on “Inside the Economy”, we focus on the increasing amount of overdue rent and the current global debt situation. Over 11 million people have fallen behind on rent as the economy is still coping with the pandemic. There is a trend of Americans increasingly tapping into their home equity, is this a result of COVID-19, high home values, or low interest rates? In uncertain times, investors tend to collect cash, how have bank assets changed in the last 12 months? Debt accumulation has increased substantially compared to past years. Which countries have been acquiring the most debt in 2020? Tune in to hear about all this and more!

 

Key Take-aways:

• 11.4 million people currently owe on average $6,000 in back rent
• Home equity withdrawals have hit the highest rate in 12 years
• Community banks’ assets grew 11% and commercial banks’ grew almost 15% this year
• Global manufacturing is picking up
• Canada, Japan, United States and China have seen the largest increase in total debt this year