Sharkey, Howes & Javer

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

Inside the Economy: The Shift from Saving the Economy to Bettering it

This week on “Inside the Economy”, we discuss the path to recovery for the U.S. economy. The U.S. has been in damage control since COVID-19 shut down the economy earlier this year. As gross domestic product (GDP) numbers bounce back, the focus turns to those who are struggling to make rent and mortgage payments. How will the next stimulus package support those in fragile living situations? Third quarter consumer spending has boosted corporate profits, pushing the U.S. stocks higher. The corporate credit structure in China is a cause for concern, here’s what we are keeping an eye on. Tune in to learn more!

 

Key Take-aways:

• Third quarter GDP estimates up a positive 33.1% for the quarter, while interest rates slip slightly
• Americans are late to pay their rent and mortgages, with households in states like Kansas, Nevada and Wyoming being hit the hardest
• Consumer spending boosts corporate profits by 27.1%
• The U.S. dollar continues to decline
• China’s corporate bonds are seeing a drop in price and increase in defaults

Inside the Economy: Consumers & Markets

This week on “Inside the Economy”, we look at data points on one of the most important pieces of the economy, the consumer.  Retail sales continue to recover and climb higher with home fitness equipment and food delivery leading the charge. Will this trend continue with the rise in COVID cases across the U.S.? In the stock market, major indices continue to reach all time highs as volatility deflates. How will the stock market perform into 2021? Tune in to find out more! 

Key Takeaways:

• Unemployment is down slightly
• Core inflation is still mute.
• Junk bond yields, reach lows not seen since 2014
• The financial stress index has come back down to “normal” levels
• Stock market indices continue to rise

Inside the Economy: Holiday Spending and State budgets

This week on “Inside the Economy”, we continue to look at consumer spending. Consumers are shifting dollars from restaurants and travel to household items, gifts and workout equipment. This is evident by Amazon beating their earnings estimates for the quarter. An underwhelming part of the economy is state budgets. The pandemic has left states in deficits because of the loss of tax revenue. What will they do to recover? Will the Federal Reserve step in and help? Tune in to find out more!  

Key Takeaways:

• Consumers continue to spend more as the holidays approach
• Inflation is still below 2%
• Crude Oil is still below $40
• Unemployment data remains high and we expect it to level off
• The stock market indices experienced volatility in the days leading up to the election

Inside the Economy: An Improving Economy amongst COVID-19

This week on “Inside the Economy”, we explore the improving job market and current debt trends during the coronavirus pandemic. Unemployment rates continue to improve as people get back to work and stop collecting unemployment benefits. A combination of spending less and uncertainty surrounding the future has Americans paying down debt. Where are debt delinquencies increasing and where are they decreasing? Many U.S. citizens are sitting on additional cash, but how much cash is currently sitting in the U.S. banking system? Corporations continue to issue new bonds as money remains “cheap” due to low interest rates. Tune in to hear about all of this and more! 

Key Takeaways:

• Unemployment rates and outstanding benefit claims continue to decrease
• Unemployment benefits made-up over 30% of U.S. personal income, but has declined
• Outstanding consumer debt has reduced as Americans pay off loans
• There is currently over $12 trillion in cash sitting in American’s savings accounts
• Gross corporate bond issuance in 2020 has exceeded years past

Inside the Economy: Unemployment, Foreclosures and COVID 19

This week on “Inside the Economy”, we focus on the employment trends. Unemployment remains high, however new jobs are being created in specific sectors. On a positive note, retail spending at non store retailers have increased year over year. Will this trend continue? The extra $600 per month of Federal unemployment has stopped and to no surprise, mortgage delinquencies are on the rise. We also look at remittances to Mexico, the dollar and gold prices. Tune in to find out more!

Key Takeaways:

• Unemployment remains high overall, but in pockets of the job market hiring is robust
• Retail spending continues to trend upwards
• Foreclosures and evictions are starting to increase
• Workers in the US are sending more money back to Mexico to support families
• Less oil transactions and international tourism are a few factors contributing to a weaker dollar and higher gold prices

Inside the Economy: Second Quarter GDP after COVID Shutdown

This week on “Inside the Economy”, we reflect on the gross domestic product (GDP) and employment trends from the second quarter. What was the impact on GDP as a result of the lockdown? As spending and employment rates continue to recover, what is in store for the remainder of 2020? More job openings are becoming available and temporary layoffs are returning to the workforce, but what is the trend with permanent layoffs? Consumer spending has been down since many are staying closer to home, but it seems as if stimulus spending has helped boost spending during this difficult year. What industries have seen the direct impact of restricted spending? Tune in to hear this and much more!

Key Takeaways:

• GDP declined at an annual rate of 32.9% in Q2 of 2020.
• Temporary layoffs have dropped, but permanent job loss has been slowly climbing
• Job openings are beginning to increase 
• Decreased spending has led to less outstanding credit as Americans have more money to pay off loans and credit cards
• Travel, real estate, consumer discretionary, and energy have all seen the impact of the stay-at-home order