Consumers are the ultimate driver of an Economy, especially the US economy. By most estimates, the consumer and his/her spending makes up over 66% of the US GDP (Gross Domestic Production) a broad measure of economic health.
Here is an interesting analysis of the Bureau Of Labor Statistics (BLS) most recent monthly Employment Report … mentioned on our “Break In” of our Friday post.
Employed Consumer
The highest, most blunt view of employment is the Unemployment rate, usually figured in % total unemployed.
At 4.4%, the unemployment rate has fallen to a rate many, including ourselves thought maybe possible via post great recession!
The little Economy Engine that could!
Take this job and shove it
Confident enough to walk away from the job? Sure looks like it.
Said another way, individuals have enough confidence in finding a new job, they are not afraid to walk from their current one.
A new high soon?
Job Opening- aka JOLTS
Brought to the attention of many by our current Federal Reserve Chairwoman, Janet Yellen, the job opening report also known as JOLTS report is showing clear evidence of job opportunities.
This chart helps explain why workers are not afraid to walk from their current job as well (prior chart.)
Jobs are abundant!
Total Employment to Population
Certainly the Great Recession has had lingering effects. Focusing on the move upward since 2009, one can see the line heading in the correct direction, possibly giving confidence to those above who are leaving their current job.
Bottom line, a more confident, job opportunistic consumer economy!
Full Circle Now- Higher Spending? Higher GDP?
Going back to our original statement, with so much tailwind for the consumer coming from the employment of the US Economy, it would not be a stretch to think higher spending is in the cards, and a better GDP!
NICE!!
Have a Great “Healthy Consumer Economy” Monday!
John A. Kvale CFA, CFP
Earnings, the key to Capital Market Growth … Let’s get an update?
The ultimate driver of Capital Markets are Earnings. Yes, we can argue about interest rates, currencies, world political and economic cycles, but all of these events are only important in how they change earnings or the growth there of “Earnings”.
Let’s take a look at early statistics from 2017!
Earnings Via our Friends at Factset
This from Factset, one of our favorite data aggregators in their regular weekly report.
Looking closely at the following chart, which is TRAILING earnings, forward looking capital market expectations can be seen. The trailing earnings are actually falling over the last few years, but the forward expectations as noted from the first bullet above are expected to climb more rapidly than the past six years.
So just where are these revenues that are creating accelerating growth coming from?
P/E or the Price to Earnings is the most blunt way to measure the valuation of capital markets. A high P/E might mean markets are overvalued and need to grow into their valuations, or a reversion to the mean reset to a lower level may be in the cards.
From Factset’s estimates above, the current market P/E is about 22 with a normal of 16-17, undoubtedly higher than normal but certainly no guarantee of an imminent reversion down to lower levels.
If the growth estimates mentioned in the very first bullet come through in 2017, much of this froth may be taken out of the capital markets.
There you have it, a nice ‘Earnings Update” … We will be watching closely!
Have a great “Earnings Update” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com
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Posted in Earnings, Earnings Season, Economy, Interest Rates, Investing/Financial Planning, Market Comments, Political, World Political
Tagged Earnings, Earnings update, Factset, P/E