Falling Sales and Falling Populations









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January 22, 2023

U.S. RETAIL SALES DECREASE IN DECEMBER:  Retail sales fell 1.1% in December from the prior month (seasonally adjusted).  Sales in December were 6.0% higher than one year ago.
(census.gov/retail/sales.html)

STOCKS RISE ON FRIDAY, BUT NOT ENOUGH TO SALVAGE A WINNING WEEK FOR THE S&P 500:  Falling U.S. retail sales and lots of indications by corporations that they are concerned about economic slowing caused a bit of a halt in the 2023 rally.  Google parent Alphabet and Microsoft both announced large layoffs, fueling fear of a 2023 recession.  U.S. retail sales fell in December. Then on Friday, stocks almost came all the way back to positive on some solid corporate earnings reports. 

LONGER-TERM PERFORMANCE:  Below are the annualized three-year and five-year numbers for these same indices.  

NEW UNEMPLOYMENT CLAIMS REMAIN QUITE LOW:  Last week only 190,000 new unemployment claims were filed in the U.S., a decrease in 15,000 from the prior week.  The labor market remains strong for the time being.
(dol.gov/ui/data.pdf)

SALES OF EXISTING HOMES CONTINUE TO DECREASE:  For the 11th month in a row, sales of existing homes decreased in December.  Sales in December were 1.5% less than November.
(Source: nar.realtor/newsroom/existing-home-sales-receded-1-5-in-december)

CHINA’S POPULATION PROBLEM:  The world’s most populous country is shrinking.  China’s National Bureau of Statistics announced last week that its population decreased in 2022 by 850,000 people.  Its total population dropped to 1.412 billion.  The number of births dropped from 10.62 million in 2021 to 9.56 million in 2022.  The number of births per thousand people dropped from 7.52 to 6.77.  India has a population of about 1.4 billion and is still growing, so China will likely soon lose its status as the most populous country on the planet.  Births in China experienced an uptick in 2016, right after the one-child-per-family policy was abolished, but births have slipped every year since.  China’s working age population is projected to decrease by about 0.2% per year for at least the rest of the decade.

JAPANESE INFLATION:  When is the last time you saw that phrase?  Japan’s rate of annual inflation hit 4.0% in December.  That is the highest it has been since 1981.  Some of you reading this may be old enough to remember that in the 1970s and into the early 1980s, Americans were worried about the economic powerhouse that was Japan.  They were the second largest economy in the world, and threatening to take over from the U.S. as number one.  Then demographics kicked in.  Their population aged, and they had no immigrant population to speak of to drive growth.  Japan’s economy went into a very long period of slow or negative growth and low inflation.  For a while, it was easy for Japan to have one of the last central banks that was keeping its monetary policy loose.  Japan’s recent inflation may put pressure on the Bank of Japan to begin to tighten and raise interest rates, but so far it has not.  Currently, the Bank of Japan is projecting that Japan’s inflation will drop back down to 2.0% by the first quarter of next year.

THE VIRTUES ARE COMING!:  When we started Stonecrop Wealth Advisors, we had to make a lot of decisions.  First, what to name the company.  This was a very difficult process and one that was finalized on a beach in Punta Cana, Dominican Republic.  Then came the mission statement.  We worked with a consultant to help, and one of the best pieces of advice we got was to go through a process, come up with a mission statement, and then move on.  Then came corporate values or virtues.  These did not come as easily, and it was important to me that this be a collaborative process.  I am happy to announce that we have finally agreed on five corporate virtues for Stonecrop Wealth Advisors.  For now, consider this the teaser.  More on this later.

A WEDDING TO REMEMBER:  As many of you know, my father-in-law, Clete Bonner, passed away last year.  We recently helped his widow, my mother-in-law, move to a new place.  In so doing, we went through a variety of belongings, including pictures.  We came across their wedding picture from the mid-1950s.  Clete and Shirley are the bride and groom below.  Clete looks a little scared, and where is his wedding ring?

Have a great week!

Our mission is to help you see the objective, find the path, and navigate past the obstacles to a more prosperous future.

Douglas R. MacGray, J.D., C.F.P. ®
President
Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax
(610) 628 4545
dmacgray@stonecropadvisors.com

“Don’t waste the time.  Time is the final currency, man.  Not money, not power – it’s time.”  David Crosby

“Now listen, you who say, ‘Today or tomorrow we will go to this or that city, spend a year there, carry on business and make money.’  Why you do not even know what will happen tomorrow.  What is your life?  You are a mist that appears for a little while and then vanishes.”  James 4:13-14 (NIV)

SOURCES:
 JAPANESE INFLATION: wsj.com/articles/japan-core-inflation-hits-4-for-first-time-in-four-decades-11674181325?mod=economy_more_pos2
CHINA’S POPULATION PROBLEM:  wsj.com/articles/chinas-economy-faces-deeper-problems-than-its-slowing-growth

(c) 2023 A.D., Stonecrop Wealth Advisors, LLC, All Rights Reserved

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets. 
*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States. 
*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets. 

Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission. 
 
 
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  • AUTHOR

    Doug MacGray

  • DATE

    January 23, 2023

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