Incomes, Salaries & Wages
Total incomes, salaries and wages have been rising much faster than inflation:
6.8% – total income growth – 8/06 – 8/07
7.1% – growth in total wages + salaries – 8/06 – 8/07
1.97% – total consumer inflation rate – 8/06 – 8/07
For obvious reasons the foregoing items won’t be featured by the media.
Fewer people today are being laid off from their jobs when compared to the same period 10 years ago:
312,000 – 4-week avg. of initial claims for jobless benefits – Sept. 22, 2007
319,000 – 4-week avg. of initial claims for jobless benefits – Sept. 20, 1997
Obviously the chances that those items would have been spelled out for the public by the media were zero.point.zero.
The stock markets were volatile this week.
Speaking of stocks and of volatility, back in early-2003 you could have purchased Burlington Northern for around $25 a share. That’s when the Xanax brigades were selling that company (among others) in a panic. Yesterday Burlington closed at $81.78 per share.
$25 – 2003 – panic selling in the markets
$82 – 2007
+ four years of dividends too
Morals of the story:
Do the opposite of what the markets are doing.
Do the opposite of what the “experts” are saying in the financial media.
Read “Wall Street on Sale,” by Timothy Vick.
New home sales in August came in at the annualized rate of 795,000 units, below Wall Street expectations and well below the revised figure of 867,000 in July. Sales of existing homes in August were reported to be 5.5 million units (annualized), in line with expectations and slightly below the 5.75 million existing homes reported to have been sold in July. The national median sales price of existing homes increased 0.2% from August 2006 to August 2007. New home sales by units dropped 21% on a year-over-year basis. Existing home sales by units are at their lowest levels since 2002. New home sales by units are at their lowest levels since year 2000.
For obvious reasons the media’s headlines regarding those items fell somewhere between Prozac and Zoloft.
Lay Down Sallie
The private equity group that originally had agreed to buy out Sallie Mae for $25 billion is having second thoughts. I don’t blame them. Would *you* want to be in the business of making large, unsecured loans to the spoiled-brat denizens of Generation Y? I mean, come on, let’s be honest: some of those kids are so utterly brain dead they couldn’t find reality if you gave them maps and trail guides.
Speaking of which, that new law regarding student loans is no panacea. Although the elimination of a large government subsidy is a good thing, the spending of increased federal tax dollars on student loans without conditions on their usefulness — e.g., healthcare, medicine, science, technology, and business/law, as opposed to liberal arts — that’s a bad thing. Especially in light of the festering cancer of leftism that’s developed in recent decades in liberal arts programs at campuses across the country.
Regarding private equity buyouts, in general, a correction always was inevitable. At some point interest rates, or the economy at large, or general market conditions, were bound to have slowed down that gravy train. But still there are plenty of deals out there and they will be made. The specific prices of those deals are going to matter now much more than they did 6-9 months ago.
The Commerce Department issued its second and final revised estimate of inflation-adjusted growth for Q2:
That’s way up from Q1. It’s solid by any historical measure. As for Q3, time will tell.
Other Econ Stuff
Consumer spending in August was up sharply. Consumer spending accounts roughly for 70% of all economic activity.
Total construction spending in August was up sharply from July. FYI, not that many people know about this — hell, not everybody in the real estate industry knows this — but commercial construction still is going quite strong. Sustainably strong too.
A few words about that short-lived UAW strike:
The national liberal Democrat media could not have been more blatant in its cheerleading for that work stoppage. Yet GM never batted an eyelash. The general public could not have cared less.
Our economy and our country have changed quite a bit since the dog days of the 1970’s. Even Robert Novak would be able to grasp the harsh realities for private-sector unions. Simply put, industrial unions are heading towards absolute irrelevance.