Uncategorized, Weekly Update

U.S. Economic Indicators Show Strength


Tagged: , , , , , ,

Published September 15, 2017

timingcube_cartoon091517

Below is a really good overview of economic activity in the U.S. looking at some lower level data.

When times are good, people go to Vegas. Since the recession in 2008, Las Vegas convention attendance has climbed to new highs. At the current pace, convention attendance and overall Vegas visitation will set new records in 2017.

Las Vegas Visitors vs Market

People loved Vegas in the 1980s and 1990s. While convention traffic continued to grow through the 2001 – 2002 NASDAQ melt-down, overall visitation to Vegas declined. Both convention activity and overall visitation to Vegas declined during the 2007-2009 Great Recession. Since 2009, visitation to Vegas is signaling economic expansion.

Nationally, hotel occupancy is running about the same pace as it did in 2015 and 2016, the two best years on record. In the last recession, hotel occupancy was roughly 20% below current levels for all of 2009. Hotel occupancy looks good.

The National Restaurant Association created the Restaurant Performance Index (RPI) in 2002. It is a monthly composite index that tracks the health and the outlook for the U.S. restaurant industry. The index includes metrics like same-store sales and labor and capital expenditures. The RPI shows expansion.

Restaurant Performance Index

On the Road

Total vehicle miles (cars/trucks on the road) traveled in the U.S. is rising. During recessions, people usually drive less as was evident in the last recession (grey vertical bar).

Moving 12-Month Total Vehicle Miles Traveled

The dramatic upturn in vehicle miles driven in mid-2013 may suggest the recovery in the Main Street economy did not really engage until just a few years ago. A combination of factors launched miles driven out of the lower, depressed four-year range including the collapse of oil from $100/barrel to $40/barrel, lower and falling unemployment, rising home values and rising consumer sentiment. As a result of being relatively young, the “Main Street” economic expansion may have several more years of growth going forward.

In the Home

The metrics above capture trends that involve people leaving the home. To see what is happening in the home, we examine retail sales of furniture and home furnishings. Before both the 2001-‘02 and 2008-’09 recessions, furniture and home furnishing purchases leveled off and declined. Today, the industry continues to grow.

Furniture and Home Furnishing Sales

 

In short, there is no hint of recession on the horizon in the U.S. As a result, the stock market continues to attract buyers and set record highs.


Market Update

With Hurricane Irma doing perhaps less damage than some market participants feared, stocks ripped higher Monday with a +1% gain in all indexes. The market provided a second day of gains Tuesday adding another +0.3% with Apple’s new product announcement in focus. A flat day Wednesday nevertheless kept momentum going as stocks showed no signs of weakness at the new high levels. A bit hotter inflation report Thursday pushed yields higher but had no real impact on stocks. The Nasdaq gave back a bit more with a -0.5% slide. However, the index remains almost +20% on the year. A steep rise in semiconductor firm Nvidia’s target price offset a -7% drop in software maker Oracle’s shares to keep the week’s rally intact. Stocks tacked on another +0.2% to close a solid week.

A breakout in the S&P 500 this week to new highs with the index rising +1.56%. The Nasdaq 100 added +1.28% while the small-cap Russell 2000 continued its v-shaped recovery with a +2.29% gain.

Warm wishes and until next week.