Fact Pack! Sticking the Landing
By Hightower Las Vegas and RCG Economics on August 11, 2023
Will the Fed be able to stick the hoped-for “soft landing” after a string of interest rate hikes that began in March 2022? That’s the subject of Wells Fargo’s latest market analysis, which notes that the U.S. economy grew at an annualized rate of 2.4 percent in the Q2 of 2023 — but also points out that employment costs are rising at a rate that is not consistent with inflation.
As of June 2023
“Wage moderation” and “less upward pressure on consumer prices” are needed, say Wells Fargo’s economists, who think it is “more likely than not” that the U.S. economy will see “a few quarters of negative GDP growth and declining employment” in early 2024. But they also believe “the probability of a soft landing has increased.”
Fact Pack co-publisher and HighTower wealth management advisor Mike PeQueen explains further:
GDP growth in the second quarter was broad-based, including positive rates of growth in the primary demand components of personal consumption expenditures (PCEs), fixed investment and government spending.
The year-over-year change in the core PCE deflator, the Fed’s prime measure of consumer price inflation, dropped from 5.4 percent in early 2022 to 4.1 percent in June — and the three-month annualized rate of change in June was only 3.4 percent, suggesting that the year-over-year rate may ease further in the coming months.
Wells Fargo graph:
As of June 2023
Consumer Credit
A credit crunch may be coming:
As of 8/8/23
Household Debt
Total household debt in the U.S. rose by $16 billion to reach $17.06 trillion in the second quarter of 2023, according to the latest Quarterly Report on Household Debt and Credit. Credit card balances saw brisk growth, rising by $45 billion to a series high of $1.03 trillion.
As of Q1 2022
Other balances, which include retail credit cards and other consumer loans, and auto loans increased by $15 billion and $20 billion, respectively.
Bankruptcies
S&P Global Intelligence has assembled recent bankruptcy statistics:
As of 8/1/23
Las Vegas Real Estate Stats
The Las Vegas REALTORS® (LVR) reported that the median price of existing single-family homes sold in Southern Nevada through its Multiple Listing Service (MLS) during July was $450,000. That’s up 2.0 percent from June, but down 3.2 percent from $465,000 in July of 2022. Local Las Vegas Valley home prices are still below the all-time record of $482,000 set in May of 2022. Trend graph:
The median price of local condos and townhomes sold in July was $273,500. That’s up 0.6 percent from $271,800 in July of 2022, but still below the all-time record condo and townhome price of $285,000, also set in May 2022.
By the end of July, LVR reported 3,524 single-family homes listed for sale without any sort of offer. That’s down 4.2 percent from the previous month and down 51.9 percent from the same time last year. Likewise, the 871 condos and townhomes listed without offers in July represent a 6.3 percent decrease from June and a 46.2 percent decline from one year earlier.
Meanwhile, fewer homes are changing hands. LVR reported a total of 2,651 existing local homes, condos and townhomes sold in July. Compared to July 2022, sales were down 1.2 percent for homes, but up 0.7 percent for condos and townhomes.
Local home sales are on pace to be lower than they were in 2022, when LVR reported 35,584 total sales. That followed a record year for existing local home sales in 2021, when LVR reported 50,010 homes, condos, townhomes and other residential properties were sold. (That was the first time LVR reported more than 50,000 local properties selling in a year. It topped the previous record set in 2011 by nearly 2,000 sales.)
World Economies
By the end of 2023, the world economy is expected to have a gross domestic product (GDP) of $105 trillion, or $5 trillion higher than the year before, according to the latest International Monetary Fund (IMF) projections from its 2023 World Economic Outlook report.
Visual Capitalist has an infographic showing which countries dominate:
As of December 2021
Back to School
This year, U.S. consumers are set to spend more than ever on school supplies, with a typical household looking to spend $890 in 2023 — a 3 percent increase from 2022, but up 28 percent from the amount spent in 2019 — according to data from the National Retail Federation.
Clothing and shoes are often the biggest contributors to overall spending, which is predicted to reach $41 billion this year, more than double the total spent in 2007:
As of 2019
Posted Packages
The 13 biggest shipping markets in the world were responsible for 161 billion posted packages in 2022, an increase of 1 percent compared to the previous year, according to the Pitney Bowes Parcel Shipping Index.
As the following Statista chart shows, China shipped 110.6 billion packages in 2022, and the U.S. and Japan came in second and third with about 21 billion and 9 billion parcels, respectively:
As of 2022
Wildfire Costs
Wildfires in the U.S. have become more catastrophic and expensive in recent years, with the U.S. Department of the Interior and the U.S. Forest Service nearly doubling their combined spending on wildfire management in the last decade, according to a Pew analysis.
As of November 2022
State and local governments have seen spending increase, as well, and so have supporting agencies and organizations. In a nutshell, it’s complicated:
(Note: For its study, in addition to an extensive review of existing research and publicly available data, Pew researchers completed 18 interviews between December 2021 and July 2022 with wildfire and budgeting experts in six states—Alaska, California, Florida, Nevada, Texas, and Washington—as well as the U.S. Department of the Interior’s Office of Wildland Fire, the U.S. Forest Service, the Federal Emergency Management Agency, the Congressional Research Service, and the National Association of State Foresters (NASF).)
Pew’s research found that:
- In the period from 2017 to 2021, the average annual acreage burned in the U.S. was 68% larger than the annual average from 1983 to 2016.
- The increase in state spending in recent years varies, but available data shows significant growth. For example, Washington spent an annual average of $24 million in state funds on wildfire suppression between 2010 and 2014. For the period from 2015 to 2019, that average more than tripled to $83 million.
- States most commonly draw on general fund revenue for wildfire activities and often pay upfront for these costs while awaiting reimbursement from other levels of government.
This Pew infographic illustrates:
As of November 2022
Pew found that states “variably share costs with local governments”—in Florida and Texas, for example, state and local agencies “each bear their own costs as they work side by side; and in California, local governments must contribute a cost share under the state’s disaster assistance program.”
Pickleball
If you haven’t yet played pickleball, odds are you’ve at least heard of it. Pickleball’s been dubbed the fastest-growing sport in the country (plus 18 percent since 2014) but the title actually belongs to golf — if one uses a definition that includes various forms of “grassless” ball-and-club play. By the broader definition, golf’s growth over the past eight years has topped pickleball by 4.5 million people.
As of August 2023
The National Golf Foundation reports that 2.5 million (10 percent) of today’s 25.6 million on-course players credit at least one off-course experience with getting them out on a course, and around two-thirds of today’s on-course beginners are coming to the course with off-course experience (compared to fewer than 40 percent just five years ago).
On the Horizon
Mike PeQueen: This week’s calendar is busy but fairly benign. Thursday’s initial jobless claims report will be the most interesting.
Next week’s MarketWatch calendar:
