Fact Pack! Whoa!
By Hightower Las Vegas and RCG Economics on June 23, 2023
Those of you with a penchant for politics may be interested in this wow-worthy story from CNN mentioning what is happening with Nevada in the big federal investigation into fake electors. A few key paragraphs:
“The two Nevada Trump electors who were given the limited immunity – the state’s Republican Party Chairman Michael McDonald and another Nevada GOP official, Jim DeGraffenreid – both testified before the grand jury last week.
…
The two Nevada fake electors who testified recently spoke to the grand jury about the actions of Nevada’s former GOP attorney general Adam Laxalt, and Jesse Binnall, a lawyer who worked for the Trump campaign in Nevada.”
Jobs
Nevada’s seasonally adjusted unemployment rate was 5.4 percent in May 2023, mirroring the April figure, according to the Nevada Department of Employment, Training and Rehabilitation’s (DETR) May 2023 economic report. The metric was up by 0.2 from 5.2 percent in 2022.
Source: DETR as of May 2023
DETR table comparing Nevada to national numbers:
As of May 2023
As in previous months, the labor force in Nevada grew. The state saw an increase in employed people equivalent to 4,000. The labor force in Nevada is 1,579,670 people as of the end of May. The number has increased by 32,557 since May 2022.
In the three Metropolitan Statistical Areas (MSA), the unemployment rates were:
- 5.6 percent in the Las Vegas area
- 4.1 percent in Reno
- 4.4 percent in the Carson City area.
Las Vegas graph and data:
Source: DETR as of May 2023
Reno:
Source: DETR as of May 2023
Carson City:
Source: DETR as of May 2023
Among Nevada’s counties, the lowest unemployment rate was in Eureka County at 3.5 percent, and Nye County had the highest rate at 6.7 percent.
More detail on local area labor force statistics:
Source: DETR as of May 2023
Jobless rate data:
Source: DETR as of May 2023
Housing Inventory
Realtor.com is out with the latest data on the existing home market. For week ending June 17, active inventory growth slowed again, with the number of for-sale homes up just 5 percent over one year ago. What should we make of this? Fact Pack co-publisher and economist John Restrepo:
“The number of homes on the market continues to rise, but that number is shrinking and is likely to slow in the months ahead. New listings are down again, as well. Last week saw a decline of 26 percent over a year ago.”
Calculated Risk graph of the year-over-year change in inventory according to realtor.com data:
As of June 17, 2023
Architecture Billings
Demand for architectural services can be an economic indicator, and notably, architecture firms saw a rebound in billings in May after a dip in April, per the latest Architecture Billings Index (ABI) from the American Institute of Architects (AIA). The index score for May (51.0) was the highest it has been since September 2022. Inquiries into new projects and design contracts also increased in May. Does this mean all is well?
Fact Pack co-publisher John Restrepo:
“Despite growth in the overall index in May, conditions remain variable in different regions of the country. Billings were up at firms located in the South for the second consecutive month, but were essentially flat at firms in the Midwest, following six months of growth. Billings continued to decline at firms in the West/Mountain West and Northeast, and the index has declined in six of the last eight months, suggesting a slowdown in commercial real estate investment on the horizon.”
As of May 2023
Global Prospects
The annual Global Economic Prospects report by World Bank Group provides an in-depth examination of growth outlooks, inflation data and interest-rate hiking cycles.
Key takeaways from this year’s report:
- After a growth rate of 3.1 percent in 2022, the global economy is projected to decelerate significantly to 2.1 percent in 2023 due to continued monetary policy tightening aimed at controlling high inflation. A slight recovery to 2.4 percent is forecasted for 2024.
- After a peak of 9.4 percent in July 2022, global inflation has fallen to 7.2 percent year-over-year as of April 2023. Core inflation (which excludes food and energy) is varying between economies, declining faster in emerging markets and developing economies compared to a slower decline in advanced economies.
- Global trade growth is anticipated to slow down from 6 percent in 2022 to 1.7 percent in 2023, followed by a slight recovery to 2.8 percent in 2024. (A key contributor to this predicted decline is a significant increase in restrictive trade policy measures around the world.)
As always, with such forecasts in an increasingly volatile world, take them with a grain of salt and be prepared for adjustments.
GDP forecast table from the report:
Source: World Bank Group as of January 2023
Graph showing the growth case for the prior decade, and who is expected to contribute what in the years ahead:
Source: World Bank Group as of January 2023
Interest
The Bank of England announced this week it is continuing its streak of interest rate increases, raising it by 0.50 points to 5.0 percent. This follows the suit of the European Central Bank, which declared another rise last week, moving from 3.75 percent to 4.0 percent. The U.S. still has the highest rate of the advanced Western economies (5.25 percent).
The Japanese Central Bank, which started applying a zero-interest strategy even earlier during the 1990s asset bubble, has stuck with the policy, even switching to a negative interest policy in 2016 as the country battled chronic economic growth and deflation issues. Despite stronger-than-expected inflation, the Bank of Japan stuck to its guns on Friday, reaffirming its belief that inflation will slow later this year.
As of May 2023
Yikes!
Pew Research is out with new data showing the 50 states cumulatively face as much as a $334.3 billion shortfall over the next 20 years because of insufficient retirement savings. How did we get here, you ask?
Fact Pack co-publisher and Hightower wealth management advisor Mike PeQueen explains:
“Though many Americans save for retirement through employer-provided plans, millions of private sector workers do not have access to such plans because not all employers – especially startups and small businesses— can afford to provide retirement benefit, and not all workers can afford to adequately save and invest. This leaves state governments as well as Congress grappling with a critical question: What is to be done about workers who don’t have enough money to retire?“
(Note: For households to maintain working-year living standards, many financial advisers recommend an “income replacement” target of 75 percent of the average income earned between ages 45 to 64.)
The Pew analysis projects that between 2021 and 2040:
- States face an estimated $334.3 billion in aggregate increased spending because of insufficient savings by residents.
- The share of U.S. households with people age 65 and older and less than $75,000 annual income in their retirement—which indicates financial vulnerability—is expected to increase by 43 percent, from 22.8 million to 32.6 million.
- The “age dependency ratio”—that is, the share of households with people age 65 and older compared to those with people of working age—is expected to grow by 46 percent.
Map (click here to view the interactive version on the Pew site)(and note that Nevada is one of the states that saw substantial increased risk):
Source: pewtrusts.org as of May 2023
What are states doing about it?
California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, New Jersey, New York, Oregon, and Virginia have all passed legislation setting up automated individual savings programs, according to Pew:
Known as auto-IRAs, work and save programs, or “secure choice”, these programs automatically enroll workers who lack access to a savings plan at work in an individual retirement account (IRA). A portion of their wages are set aside every pay period (employees can choose whether to opt out).
Although some of the state programs are still in their infancy, more than 600,000 savers in Oregon, Illinois, California, and Connecticut have already amassed nearly $650 million in assets since 2017.
America Is Getting Older
The nation’s median age increased by 0.2 years to 38.9 years between 2021 and 2022, according to Vintage 2022 Population Estimates released this week by the U.S. Census Bureau.
A third (17) of the states in the country had a median age above 40.02, led by:
- Maine with the highest at 44.8 and
- New Hampshire at 43.3.
Lowest:
- Utah at 31.9 and
- Texas at 35.5.
Infomap:
As of 2022
Good Eats
This year’s edition of ‘The World’s 50 Best Restaurants‘ and the so-called Oscars of gastronomy have named Central in Lima, Peru, as the top restaurant in the world, followed by two Spanish restaurants – Disfrutar in Barcelona and DiverXO – in Madrid.
Only one U.S-based eatery made the top 10, (after none ranked in 2022): Atomix in Manhattan’s Koreatown serves modern Korean dishes, seats only 14 and climbed up 25 spots since last year, an astonishing feat for the list:
Note: Gold medalist Central — run by husband and wife team Virgilio Martínez and Pia León — has its own research arm, and serves 15 courses per meal that take diners through Peru’s different altitude levels from the sea floor to the high Andes.
Next Week
We’ll be dark on Monday, July 3rd, returning in full force for your Fact Pack pleasure on Monday, July 10th. Have a safe and wonderful Independence Day weekend!
Source: Reader’s Digest 4th of July memes
On the Horizon
Mike PeQueen: Friday’s release of the Consumer Price Index (the Fed’s favorite gauge of inflation) will be the next chapter in this seemingly never-ending attempt to discern whether inflation is headed back to the low level the Fed wants — and on the desired timeline.
Next week’s MarketWatch calendar:
