Sharkey, Howes & Javer

Inside the Economy: Global Economy, New Administration, and Trade

This week on Inside the Economy, we explore the global economy, the new administration’s economic direction, and trade. Looking at projections for global GDP growth in 2025, we’re not expecting significant growth in countries like Great Britain and Germany. How will their respective central banks manage inflation compared to the United States? The U.S. economy has experienced steady post-pandemic GDP growth, with consumer spending leading the way. In the year ahead, we’ll be closely monitoring both consumer consumption and government spending. As for inflation, what key components will be monitored to ensure CPI remains steady? Turning to global supply chains, the ISM Manufacturing Index has remained in contraction for most of 2024. Key drivers include ongoing supply chain disruptions and the strength of the U.S. dollar. On the flip side, where does the services sector stand—contractionary or expansionary—heading into 2025? Tune in to learn more!

 

Key Takeaways:

• Crude Oil at $76.13 a barrel
• Unemployment at 4.1%
• S. GDP growth rate at 3.1% in Q3

Inside the Economy: 2024 Market Performance, Household Finances, and The Housing Market

This week on “Inside the Economy,” we break down 2024 market performance, how finances for US households look going into 2025, and the housing market. The S&P 500 Index is in rare air with back-to-back 20%+ returns in 2023 and 2024. Should we expect another 20%+ in 2025? US consumers remain resilient with spending on goods and services finishing strong in 2024.  Can US consumers continue to spend at the same rate in 2025? US home affordability remains historically low, and homeownership continues to hover around 62%. High interest rates with long-dated bonds back to their highest level over a year have kept a lid on refinancing and mortgage activity. Where will the US housing market go in 2025? Overall, we continue to see a normalization in the US dollar and interest rates. Tune in to learn more!

 

Key Takeaways:

• US housing annual growth remains around its long-term average of 4-7%
• 30-year bonds moved back to their highest yield in more than a year, just shy of 5%
• US Debt and the US Dollar continue to climb

Inside the Economy: Inflation, Markets, Bond Yields, and Manufacturing

This week on “Inside the Economy”, we break down the sectors of inflation, market trends, bond yields, and manufacturing production. The primary driver of inflation still present in the market is housing, while core goods show little to no inflation year-over-year. Where else has inflation cooled? New home prices remain high, and new home inventories are steady. Is household debt as a percentage of income impacting consumers when compared to historical data? As for the equity markets, they continue to be overvalued, particularly the Dow. In the manufacturing sector, production is nearly back to where it was pre pandemic. How do other countries like Germany and Japan compare in terms of manufacturing capacity? Tune in to learn more!

 

Key Takeaways:

• 10-year bond yield at 4.57%
• Core Inflation at 3.3% (YOY)
• Manufacturing Production Index at 99.0 in November

Inside the Economy: Jobs, Housing, and Global Markets

This week on “Inside the Economy”, we evaluate the outlook for the upcoming Federal Reserve meeting, the job market, housing, and global markets. The chances of a future interest rate cut by the Fed have increased – what factors have led to this change? Yields on fixed income have gone down; how might they react to another interest rate cut? We also explore U.S. manufacturing employment and consider policy shifts in the past several years like tariffs aimed at retaining jobs. Are these policies successfully bringing jobs back to the U.S.? Is the overall job market starting to tighten? Additionally, we discuss the strong momentum in U.S. markets post-election – are stocks becoming overvalued, and what could trigger a correction? Is there still an imbalance between U.S. stocks as compared to markets in other countries? Tune in to learn more!

 

Key Takeaways:

• 10-year bond yield at 4.17%
• Unemployment at 4.2%
• 30-year Mortgage at 6.69%

Inside the Economy: Consumers, Markets, and Cost of Money

This week on “Inside the Economy”, we discuss the consumer, markets, expectations, and the cost of money. Total retail sales exceeded $700 Billion in October. Are these high sales due to the upcoming holiday season? Have credit card debt delinquencies increased as a result of higher consumer spending? House prices have yet to retreat, despite higher mortgage rates. How much inventory is available for new home purchases? As for the markets, they continue to reach new record highs. According to the Price-to-Earnings (P/E) ratio, is the market currently overvalued or undervalued? Has the gap between U.S. and international securities widened? Tune in to learn more!

 

Key Takeaways:

• S. Head CPI is 2.6 (YOY)
• Total Retail Sales in October at $718.9B
• Median Single-Family Sale Price in October at $412.2k

Inside the Economy: Post-election economy, Mortgage Market, and Tariffs

This week on “Inside the Economy”, we evaluate the post-election economy, changes in the mortgage market, and the future of deficit spending. Jobless claims remain consistent year-over-year, and the personal savings rate has normalized. Regarding wages and salaries, they have been decreasing year-over-year. Are consumers concerned that inflation will outpace their wages? Meanwhile, mortgage rates have increased in October and November. What is the current volume of mortgage refinance applications? Tariffs currently account for two percent of net federal receipts, while individual income taxes and social insurance taxes make up the majority. If more tariffs are enacted, what is the projected impact on future net federal receipts. Tune in to learn more!

 

Key Takeaways:

• ISM Services at 56.0
• 30-year Mortgage at 6.79%
• Personal Saving Rate at 4.6% in September

Inside the Economy: Housing, Cash, and China

This week on “Inside the Economy”, we assess housing affordability, sales, mortgages, household cash on hand, and China’s demographics. Housing affordability is near a record low. How much would home prices have to decrease, or household incomes need to increase for affordability to return to the levels seen in the 2016-2019 markets? Total money-market fund assets are at a record $6.51 trillion, even though there aren’t any new flows into money markets. How are consumers using, or not using, their cash? Regarding China’s demographics, there have been significant shifts. What does the longevity of their nation look like, given the system-wide leverage disparity? Tune in to learn more!

 

Key Takeaways:

• 10-year bond yield at 4.21%
• Unemployment at 4.1%
• 30-year Mortgage at 6.54%

Inside the Economy: Credit Card Debt, Interest Income, and Insurance

This week on “Inside the Economy”, we explore the levels of credit card debt, interest income, and relative insurance premiums across the United States. You may have seen news about credit card balances reaching an all-time high. However, did consumer credit card spending increase or decrease. What are the current levels of delinquencies on credit card debts? In other news, mortgage interest is not going higher, even with the rise in interest rates. How do home prices compare? What is the level of interest income paid out compared to mortgage interest? Regarding insurance, Colorado is on par with Florida concerning average annual insurance premiums. What has driven the increase in premiums in Colorado? Tune in to learn more!

 

Key Takeaways:

• 30-year Mortgage at 6.32%
• Unemployment at 4.1%
• S Net Wealth in Q2 at $152.8T

Inside the Economy: Existing Home Sales, Fed Funds Rate, and the TCJA

This week on “Inside the Economy”, we delve into existing home sales, the current and projected federal funds rate, and the implications of the Tax Cuts and Jobs Act. Existing home sales are trending downward - will the recent interest rate changes improve affordability for home buyers? How might these rate decreases impact the refinance market? As we look ahead, the target for the federal funds rate is projected to be 3.5% by next summer. Is this the soft landing we’ve all been hoping for? Additionally, deficit spending currently stands at -6.5% of GDP. Is this sustainable long-term? If the Tax Cuts and Jobs Act were to sunset, what would the implications be for deficit spending? Tune in to learn more!

 

Key Takeaways:

• Core PCE Inflation at 2.7% (YOY)
• Crude Oil at $68.22 a barrel
• Federal Funds Rate at 5%

Inside the Economy: Consumer Spending, Federal Reserve, and Household Income

This week on “Inside the Economy”, we evaluate consumer spending, the upcoming Federal Reserve meeting, and household income and mortgages. Consumer spending has slowed compared to the post-COVID highs, and we’ve observed a recent deceleration in student loan repayments. Is this a sign of consumer concern? Regarding income, U.S. households have seen an increase as of 2023 numbers. How does this compare to other countries worldwide? Have unions been a contributor to the increase in income? On the other hand, mortgages are a full point lower than they were a year ago. Is this decline due to economic factors or just anticipation? Tune in to learn more!

 

Key Takeaways:

• S. Head CPI is 2.5 (YOY)
• 30-year Mortgage at 6.20%
• 10-year bond yield at 3.68%