Week Ending January 8, 2021
After a few weeks of little to no economic data due to the holidays your favorite Uncle is back at it.
Georgia turns blue… What may be the most expensive Senate race in history. Georgia Senate seats turn blue.
What does it mean – Democrats now control both the Legislative and Executive branches of the government. It will be a bit easier for President Biden to get his agenda through. Expect higher taxes, increase in spending and more rules and bureaucracy. Markets, big banks and corporate America should love the increase in spending in the short-run.
Durable goods orders…Up 0.4% month over month in November.
What does it mean – The great news is that almost across all sectors businesses spent money as is evidence by a 0.4% increase in new orders for nondefense capital goods excluding aircraft?
Initial Unemployment claims… January 2nd claims hit 787,000 the 4 week average is up to 819,000.
What does it mean – Jobless claims since mid-November continue to reverse course and go up. Why? California, New York, New Jersey, and other states continue to increase control over small business and restrict or limit their ability to operate or even stay open.
Labor participation rate… Back down to 61.5%
What does it mean – After rising to 63.4% in January 2020 we are watching the reversal pick up momentum due to forced shutdowns by several large states.
California real estate… Average home price in CA hit $690.33K according to data from Freddie Mac and Fannie Mae.
What does it mean – CA last peaked on September 30, 2006 at 640.09K and did not get back until June 30, 2018 at 641.52K. Almost 12 years. CA has been pushing the edge of insanity when it comes to Big Government, high tax rates and free everything. Even those that voted for the crazy policies are now picking up for freer pastures. The average price of a home in the SE is 270.89K. It does not take long for even a rocket scientist to figure this out…Tesla, Space X, Oracle, Hewlett Packard and other large companies all left CA in 2020. Not to mention the thousands of small businesses, retirees, and entrepreneurs that set up shop in other states.
Inflation… The Fed wants it.
What does it mean – Of all the economic data tracked by the fed, only Core CPI and Import Prices Ex Petroleum showed a year over year reading higher than 1.4%. All the other sectors are now moving south. Despite market fears and talk of inflation, it is just not there.
Have a great week all,
Doug De Groote, CFP®, MBA, CTC