Fact Pack! Big Mac Index
By Hightower Las Vegas and RCG Economics on August 27, 2024
Longtime subscribers of Fact Pack know we like to have a little fun when we can, so it is our pleasure to start today’s edition with Truflation’s expanded version of the iconic Big Mac Index. First introduced by The Economist in 1986 as a tool to illustrate the concept of Purchasing Power Parity (PPP), the original index offered a snapshot of exchange rate differences between countries by using the price of a Big Mac as a proxy for monetary valuation.
The Big Mac is sold in more than 100 countries at more than 38,000 stores, and the index now encompasses numerous nations including Argentina, Brazil, Canada, Switzerland, Hong Kong, India, Japan, Turkey, South Africa, Mexico, Germany, Italy, France, and Spain.
Trend in the U.S.:
As of 3/18/24
“The economy…”
“The economy, stupid” was a quip uttered by political operative Jim Carville in 1992 during Bill Clinton’s (ultimately successful) 1992 U.S. presidential campaign against incumbent George H. W. Bush. Carville knew then what has become common knowledge since: The outcome of presidential elections usually depends on how Americans feel about the economy when they walk into the voting booth.
Gallup’s Economic Confidence Index showed improvement between November and March, gaining 20 points, but since has slid back to where it was in December 2023.
Gallup’s July poll was conducted after the Consumer Price Index fell in June, marking the first month-to-month decline in consumer prices in four years. The economic progress was offset by an unemployment uptick in June and continuing high prices in the housing market along with high mortgage rates.
Reminder of what that looked like and the trendlines since January 2021:
Source: Statista As of July 2024
Poll data collected 7/1-21, 2024 As of 7/21/24
Gallup’s Economic Confidence Index summarizes Americans’ evaluations of current economic conditions (as excellent, good, only fair or poor) and their outlook for the economy (whether they believe it is getting better or worse). Graph:
As of 7/21/24
(Note: In Gallup’s trend of these measures since 1992, the highest ECI score was +56 in January 2000, and the lowest was -72 in October 2008.)
In July, 70 percent of Americans said they believed the economy was “getting worse,” while 24 percent said it was “getting better.”
As of 7/21/24
Jobs
The U.S. economy added 818,000 fewer jobs between March 2023 and March 2024 than originally estimated, according to preliminary estimates by the Bureau of Labor Statistics of the annual benchmark revision to U.S. employment figures.
Fact Pack co-publisher and economist John Restrepo explains the revision:
Each March, the Bureau of Labor Statistics compares its total nonfarm employment estimate against comprehensive employment data from state unemployment insurance tax records that most employers are required to file. The revision is usually small, averaging 0.1 percent over the past 10 years. This year’s revision is equivalent to -0.5 percent of total employment, the largest downward adjustment since 2009.
Fact Pack co-publisher and wealth management advisor Mike PeQueen on what it means for the broader economy:
The March jobs revision indicates that the U.S. labor market wasn’t as overheated as it looked and shows job growth was still solid. The economy added 2.08 million jobs in the 12 months ending March 2024, down from the original estimate of 2.90 million, bringing average monthly growth from 242,000 to 174,000, which is still a good number.
As the following Statista chart shows, four industries accounted for more than 90 percent of the downward revision:
As of March 2024
Nevada Jobs by the Numbers — July 2024
View RCG’s July Jobs Flash report for the Reno-Sparks and Las Vegas metros here.
Canada Flexes
Canada has said it plans to impose a 100% tariff on Chinese-made electric vehicles as it and other western nations endeavor to fight China’s electric vehicle domination. The number matches a proposed U.S. tariff expected to be finalized this week (but that could be dialed back if the U.S. gets its way in negotiations).
Imports from China spiked after Tesla began selling its Shanghai-produced EVs to Canada. The tariff is expected to force Tesla to supply Canada with vehicles made in its U.S. or European factories.
Canadian Prime Minister Justin Trudeau said the tariffs are aligned with global economies that are trying to keep up: “Unless we all want to get to a race to the bottom, we have to stand up.”
As of July 2024
Global Debt
Last week we highlighted the U.S. federal government’s revenue, spending and debt. The following Visual Capitalist graphic offers a global view:
As of Q1 2024
The U.S. and Japan were the largest contributors to the total number across advanced economies, and borrowing by China, India, and Mexico drove the largest share in emerging markets.
Modern Wealth
Americans think it takes an average of $2.5 million to be considered wealthy, according to Charles Schwab’s 2024 Modern Wealth Survey, an annual poll the firm uses to collect data on perceptions centered on saving, spending, investing, and wealth.
By generation, Boomers have the highest threshold for what it takes to be considered wealthy ($2.8 million) and Gen Z has the lowest ($1.2 million).
On average, Americans say that the average net worth required to be financially comfortable is $778,000:
Source: Yahoo Finance as of 3/18/24
Perceptions of comfort and wealth vary by region as well:
Source: Yahoo Finance as of 3/18/24
When asked whether they are wealthy now, 10 percent of Americans said yes — and 21 percent said think they will be wealthy within their lifetimes.
Source: Yahoo Finance as of 3/18/24
Americans generally give themselves passing grades when it comes to their personal finances, including how much they have saved, how much they have invested, and how prepared they will be for retirement.
Source: Yahoo Finance as of 3/18/24
Nearly three in five Americans are investing, the survey found, though just 36 percent of those polled said they have a written financial plan.
(Schwab’s online survey was conducted by Logica Research from March 4, 2024, to March 18, 2024, among a national sample of 1,000 Americans aged 21 to 75. An additional 200 Generation Z Americans completed the study. Detailed results can be found here.)
Perceptions of Investing
Investments in gold always increase during uncertain economic conditions so it’s no surprise that since the COVID-19 pandemic, there has been more of it. Gold prices reached record highs in August 2020, exceeding $2,000 per ounce — and prices have surged again recently amid heightened geopolitical unrest and increased central bank buying.
According to recent data from Gallup, when Americans were asked to identify what they consider the best long-term investment, gold was in the top three answers:
As of 4/22/24
An analysis of Google search data for the term “gold prices” shows Nevada residents are among the Americans most interested in that metric:
| Based on 2019 to 2024 data |
Specifically, searches for “gold prices” outpaced searches for “stock prices” in Nevada by the third largest margin of any U.S. state.
As of April 2024
Gallup findings on perceptions of long-term investing by income level:
As of 4/22/24
U.S. Money Reserve has an excellent analysis of the complete Gallup results, including data on all 50 states.
On the Horizon
Mike PeQueen: Now that the Fed has announced its plan to lower interest rates, the only thing that might upset the applecart is Friday’s release of the PCE, also known as the Fed’s favorite gauge of inflation. It would have to be significantly above expectations to keep the Fed from lowering rates in September — but it’s worth watching.
This week’s MarketWatch calendar:
