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| U.S. ECONOMY CONTINUES TO ADD JOBS: The amount of net new jobs per month continues to moderate, but remains healthy. In July, the U.S. economy added 187,000 net new jobs. That makes 3.1 million more jobs now than a year ago. More people entered the job market, so the unemployment rate actually increased to 3.8% from 3.5%. Average hourly earnings were 4.3% higher in August than a year earlier, a lower figure than July, and lower than most had forecast. |
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| LABOR FORCE PARTICIPATION RATE: The overall labor force participation rate increased to 62.8% from 62.6% in July. This is the percentage of working age population in the labor force. As you can see below (graph on the left), as women got into the work force in the late 1960s through the 1980s, this statistic continually rose. It sank after the Great Recession and then again during COVID. We are told that this will likely never reach the prior apex due to retirements of the aging population and the later entry into the job market of the younger age group. The participation rate for those aged 25-54 is 83.5% (graph on the right). |
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| INFLATION: The PCE Price Index is the Fed’s preferred inflation metric. It increased 0.2% in July and is up 3.3% for the prior 12 months. Over the last three months, the annualized increase in inflation using that index is just 2.1%. If these trends continue (a big ‘if’), the Fed is likely done raising rates. |
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| STRONG WEEK FOR STOCKS: After a rise on Friday, the S&P 500 had its best week since June. The August jobs report, as usual, had to be parsed, but on balance investors seemed to like it. It was weak enough to keep the Fed from being worried about overheating, but strong enough to stave off worries, for now, about a recession. The month of August ended negative for the S&P 500 and the NASDAQ Composite after five positive months in a row. Trading was thinner due to the coming holiday weekend. The unofficial end of summer is now upon us, and investors start paying closer attention. We will see if that is good or bad in September. |
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| LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices. |
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| RENTS BEGINNING TO MODERATE: According to ApartmentList.com, the average cost to rent an apartment in the U.S. in August was 1.2% less than one year ago. Rental costs have now fallen for four consecutive months. A shortage of available rental units in 2021 and 2022 drove rental prices way up. That has changed dramatically. The ApartmentList.com vacancy index has increased 22 consecutive months and now sits at 6.4%. There are a record number of new apartment units under construction at the moment. The vacancy rate hit 2.9% in October 2021 before it began to turn the other direction. |
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| A PROVISION OF THE SECURE ACT BEING DELAYED DUE TO DIFFICULTIES IN COMPLYING: If you are age 50 or older, you are entitled to put more into your IRA or 401k/403b retirement plans. These are called “catch up” contributions. Under a provision of the SECURE Act, beginning in 2024, all catch up contributions to employer-sponsored retirement plans from employees who earned more than $145,000 in the prior year must be Roth (after tax) contributions. Due to the difficulties in figuring how to comply with this new law, the IRS last week delayed the requirements of this law for two years to 2026. |
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| CASH CROP: In states where marijuana is legal, it is now the sixth most valuable wholesale crop, trailing only corn, soybeans, hay, wheat and cotton. |
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| WE ARE TRAVELING MORE NOW THAN BEFORE THE LOCKDOWNS: For the week ending August 29, 2.5% more people passed through TSA security in airports than during the same week in 2019. My wife and I have definitely been one of the causes of this higher number. |
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| CHINA GOING THE OTHER WAY WITH INTEREST RATES: While the U.S. Federal Reserve Banks continues to try to slow the U.S. economy, China is doing the opposite. Chinese citizens did not get help from the government during the COVID lockdowns, and thus the pent up spending after the lockdowns ceased never quite materialized (it was short-lived). Now China is lowering interest rates to try to stimulate economic activity. Three of China’s biggest banks lowered rates by one quarter of one percent last week. It is the third such cut this year. |
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| …AND PANIC SETS IN: I usually add one or two personal quips or stories here at the end of MacGray Matter. Once in a blue moon, I can’t think of anything, and panic begins to set in. I think there would be a mass rebellion by my readership if I just ended the email with one of the financial stories. And so I sat here trying to think of something. Having thought of nothing, I am adding a picture from one of my former students, Gidion, from his home island of Yap. He posts a picture from time-to-time, and it reminds me of how beautiful parts of this planet are that most of us will never get to. (For those of you new to this newsletter, my first job out of college was teaching high school on a four-square mile island in the South Pacific for two years.) |
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Our mission is to help you see the objective, find the path, and navigate past the obstacles to a more prosperous future.
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Douglas R. MacGray, J.D., C.F.P. ®
President
Stonecrop Wealth Advisors, LLC
Direct | Cell | Fax
(610) 628 4545
dmacgray@stonecropadvisors.com |
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“It’s those changes in latitudes, changes in attitudes nothing remains quite the same. With all of our running and all of our cunning, if we couldn’t laugh, we would all go insane.” Jimmy Buffett
“A cheerful heart is good medicine.” Proverbs 17:22
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SOURCES:
U.S. ECONOMY CONTINUES TO ADD JOBS: https://www.bls.gov/news.release/empsit.nr0.htm
LABOR FORCE PARTICIPATION RATE: https://www.calculatedriskblog.com/2023/09/comments-on-august-employment-report.html
RENTS BEGINNING TO MODERATE: https://calculatedrisk.substack.com/p/asking-rents-down-12-year-over-year?publication_id=443155&post_id=136411849&isFreemail=false
CASH CROP: https://leafly-cms-production.imgix.net/wp-content/uploads/2022/11/04104710/Leafly-Crops-Report-2022.11.4corrected.pdf
A PROVISION OF THE SECURE ACT BEING DELAYED DUE TO DIFFICULTIES IN COMPLYING: IRS Notice 2023-62
CHINA GOING THE OTHER WAY WITH INTEREST RATES: https://www.msn.com/en-us/money/markets/major-chinese-banks-cut-interest-rates-on-yuan-deposits/ar-AA1g42X1
WE ARE TRAVELING MORE NOW THAN BEFORE THE LOCKDOWNS: https://www.tsa.gov/travel/passenger-volumes
INFLATION: https://www.bea.gov/news/2023/personal-income-and-outlays-july-2023 |
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| (c) 2023 A.D., Stonecrop Wealth Advisors, LLC, All Rights Reserved |
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*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. |
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Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.
SDG
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