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Economy Larger Factor than Weather

We have looked at manufacturer, distributor, and retail sales over decades and have found that the economy is a significantly larger factor than the weather.  We have looked at pool covers, yard tools, air conditioners (central air and window units), and other similar series, and they all have a stronger relationship to the economy, despite the fact that many people feel it’s the weather.

Looking Past the Doom and Gloom Headlines

The stock market is moving lower and headlines are filled with bad news. We are reading about jittery markets, manufacturing decline in the US and China, the decline in the Purchasing Managers Index, and investor fears, to name a few recent phrases I have come across.

GDP is UP

Fourth-quarter 2013 GDP was released by the government recently, and the data looks good. GDP (adjusted for inflation) is at a record high. The “record high” comment is for anyone who still thinks the recovery from the Great Recession is incomplete. The fourth quarter came in 2.7% higher than one year earlier. The average year-over-year growth rate for the past decade is 1.8%, so the posted gain is really pretty good.

Exuberance!

A recent article stated that “Companies around the world are starting to share the exuberance that inspired investors” and that there is “increased confidence in the durability of the expansion”. First, perhaps we should question whether it was exuberance or a lack of options that inspired investors last year.

It might easily be that a lack of options led to the beginning of the rise and then a herd mentality took over. The stock market can be very emotional and perhaps that did play a role, especially if that emotion was fueled by the ‘feel good’ of quantitative easing.

The Declining Unemployment Rate

The unemployment rate fell to 6.7% in December. The decline was welcomed by most, and to those who think it matters, it was a harbinger of better days ahead. A frequent question at presentations involves the question of those people who have given up looking for a job or who are working at part-time jobs because they cannot find a more-desirous fulltime job.

December Retail Sales - Ho Ho Hum

The December Retail Sales numbers are in and they are not terrible, but neither are they terribly encouraging.  Total Retail Sales, without automobiles, came in 15.3% higher than November. The month-to-month seasonal gain was milder than normal and milder than 8 of the last 10 years (the 10-year average is 17.4%).   

Is There Really a Growing Income Disparity?

I have noticed from numerous media sources that Washington is abuzz about tackling the “unfairness” of income disparity in the US, and how members of government are looking to reclaim the war on poverty first instituted by President Lyndon Johnson.

There is certainly the general notion that the rich are getting richer and that this is happening on the backs of a disappearing middle-class and and/or a growing poverty class. This of course got me to thinking whether this was true or not.

Starting the Year

It is very cold and gray over much of the country today, and that could have a dampening impact on the economic start to 2014. A cold snap can take some of the life out of housing and automobile sales as people stay in and/or they need more cash to pay for extra heating bills. It is easy to put off a trip to the dealership when you are concerned about freezing pipes. The weather is bound to improve and with it will come ongoing positive economic opportunities in the US.

A Promising Budget Deal from Washington

House Budget Chairman Paul Ryan (R-WI) and Senate Budget Chairwoman Patty Murray (D-WA) announced a budget deal which will need to be voted on by Congress.  The Deal replaces $63 billion in sequester cuts with other savings and non-tax revenues, and it includes an additional $22.5 billion in deficit reduction.  In addition, the bill does not extend federal unemployment benefits for the 1.3 million long-term unemployed Americans. 

Doctors Say “No” in California

The Washington Examiner reported that about 7 of every 10 physicians in California (a blue state) are not going to participate in the new healthcare law, aka Obamacare, according to California’s largest doctor association.  The reason is easy to understand - the reimbursements are tied to California’s lower-than-Medicare reimbursement rates and the doctors are not willing to work for those wages.

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