National unemployment is down to 5.8%! Yahoo!!
Substance seems to be expensive nowadays. Its rarity makes it a particularly valuable commodity.
I remember banging my head studying
for the CFA exams. For study breaks I began researching the Civil War. The library,
where I spent many nights studying, had a microfiche (remember those?) of the
New York Times starting from the 1850s. The stories were incomprehensible by
today's standards. They used large words, complete sentences, and btw like
way proper English, like. Detail had value then. That led to further
study elsewhere.
I was intrigued reading about the Lincoln Douglas debates
lasting hours at a time for people who really wanted to know for what they
stood. Now, sound bites and statistical darts fly by completely out of context.
It’s hard to know what they really mean. The Wall Street Journal did an enlightening story
today, citing the Bureau of Labor Statistics regarding price increases during
the years 2007-2013.
Here are some
of them that apply to “middle America” where wages range from $18k-$95k per year
before taxes. Once again, this is only 6
years later:
- Income increased less than 1/2%
- Rent increase to 26%
- Food eaten at home rose 12.5%
- Women's apparel spending at age 16 and above fell almost 18%
- Sales of major appliances, entertainment, alcohol, restaurants, and furniture all fell
- Overall spending rose about 2.3%
- Inflation totaled about 12% BUT from a previous blog entry you might recall that the government inflation calculation was changed in 1980. If not changed, average Social Security check would be about twice what it is now. So, this inflation statistic is questionable.
Inspiration
This inspired me to open the Bureau of Labor
Statistics website and do some of my own research. I looked at the change in
several basic food prices from January 2007-October 2014. Once again, this is
only 6 years later:
- White bread per pound: +49%,
- Ground chuck per pound: +66%,
- Fresh whole chicken per pound: +46%,
- Eggs, grade a large per dozen: +24%
- Milk per gallon: +31%,
- Orange juice, canned 16 ounce: +33%
- Coffee per pound all types: +74%,
- Average US city electricity per kilowatt hour: +49%,
- Average US city natural gas per therm: +0.39%
- Employment Cost Index -37%.
- Yes you read that right. From 2007 through December 2, 2014 shows that total compensation for all workers in the United States has fallen 37%. Because this seems almost incomprehensible, I've included a copy of the graph and the data:
Employment Cost Index
Series
Id: CIU1010000000000A (B,C)
Not seasonally adjusted Series Title: Total compensation for All Civilian workers in All industries and occupations, 12-month percent change Ownership: Civilian workers Component: Total compensation Occupation: All workers Industry: All workers Subcategory: All workers Area: United States (National) Periodicity: 12-month percent change |
These are real statistics that you can take in
context. Middle America is largely not participating in the “improvement” in
our economy. Perhaps this is why Fannie Mae and Freddie Mac are once again willing to purchase loans at up to a 97% loan-to-value ratio from mortgage lenders. History repeats itself, just faster.
Regards,
Chris
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future.
This research material has been prepared by LPL Financial.
The economic forecasts set forth may not develop as predicted.
