The JRB Economic Index rose again in October. The new + 1.91 reading is a continuation of the recent trend in the Index. The U.S. consumer seems to be in a good shopping mood this holiday season. Recent events however are putting a damper on the good economic news. The price of oil is falling dramatically. This is good news for U.S. consumers, as lower prices at the pump translates into a boost in spendable income during the Christmas season. Countries like Russia however, are not happy about falling crude prices. Oil is a huge contributor to the Russian economy. How low will oil prices go? At this point it's hard to say. Our guess is that within two years the price of oil will rise back to the mid-seventy dollar range as demand for crude oil rises over this period of time.
Our outlook for 2015 is that the Federal Reserve will be hard pressed to raise interest rates during the year. With the global economy (ex the U.S.) experiencing lackluster growth, we can see the possibility that low inflation and low interest rates will be around for the foreseeable future. The truth is that the Fed should wait until inflation gets much higher before they begin to tighten. The Fed knows how to cure inflation. They simply raise short term rates and inflation will subside. A Fed tightening coming too soon could lead the U.S. into another recession. Let us hope the Federal Reserve takes a well deserved vacation, and keeps the current Fed Funds Rate unchanged throughout the coming year.
Friday, November 14, 2014
According to the Job Openings and Labor Turnover Survey (JOLTS), companies continue to hire more workers. Job openings in August were the highest in nearly 14 years. If this trend continues, we expect to see more job turnover in the future. The more jobs available, the more confidence workers feel about leaving their present job and searching for a higher paying one. This would be good because such turnover may lead to higher wages down the road. Real wage growth has been lacking in this recovery. All-in-all, the economic climate continues to improve.
Our Economic Index chart (above) is moving ever closer to the +2.00 range where it peaked last time. The last peak in our index was lower than the previous peak. Will we see a continuation of the rolling trend or will we see a breakout in the index? Only time will tell.
Thursday, October 9, 2014
Tuesday, September 2, 2014
The JRB Economic Index rose to +1.25 in June, 2014. The rise is a continuation of recent economic growth. Corporate income continues to rise and with it the stock market. Some wage growth in the coming months would be a welcome sign. The Federal Reserve will probably not raise interest rates until the job situation improves. We don't expect a rate hike until late 2015 at the earliest.
Friday, July 25, 2014
Sunday, June 15, 2014
Wednesday, May 7, 2014
The JRB Economic Index fell slightly in February. The new reading of +0.85 was slightly lower than the January, 2014 reading. The 288,000 jobs added in April, was the largest gain in two years. Vehicle sales are rising and consumer sentiment is on the rise as well. The problem causing the slow growth path the economy has taken, is the lack of wage growth. The jobless rate continues to decline, but the trend in hourly wage growth is hurting the purchasing power of consumers. So we continue on this path of continued slow growth. Because economic growth remains slow and inflation remains in check, it is quite possible that this recovery may well prove to be longer in length than most economists estimate. Let's hope this is genuinely the case.