Sharkey, Howes & Javer

This week on “Inside the Economy”, we evaluate the outlook for the upcoming Federal Reserve meeting, the job market, housing, and global markets. The chances of a future interest rate cut by the Fed have increased – what factors have led to this change? Yields on fixed income have gone down; how might they react to another interest rate cut? We also explore U.S. manufacturing employment and consider policy shifts in the past several years like tariffs aimed at retaining jobs. Are these policies successfully bringing jobs back to the U.S.? Is the overall job market starting to tighten? Additionally, we discuss the strong momentum in U.S. markets post-election – are stocks becoming overvalued, and what could trigger a correction? Is there still an imbalance between U.S. stocks as compared to markets in other countries? Tune in to learn more! Key Takeaways: • 10-year bond yield at 4.17% • Unemployment at 4.2% • 30-year Mortgage at 6.69%

This week on “Inside the Economy”, we discuss the consumer, markets, expectations, and the cost of money. Total retail sales exceeded $700 Billion in October. Are these high sales due to the upcoming holiday season? Have credit card debt delinquencies increased as a result of higher consumer spending? House prices have yet to retreat, despite higher mortgage rates. How much inventory is available for new home purchases? As for the markets, they continue to reach new record highs. According to the Price-to-Earnings (P/E) ratio, is the market currently overvalued or undervalued? Has the gap between U.S. and international securities widened? Tune in to learn more! Key Takeaways: • U.S. Head CPI is 2.6 (YOY) • Total Retail Sales in October at $718.9B • Median Single-Family Sale Price in October at $412.2k

This week on “Inside the Economy”, we evaluate the post-election economy, changes in the mortgage market, and the future of deficit spending. Jobless claims remain consistent year-over-year, and the personal savings rate has normalized. Regarding wages and salaries, they have been decreasing year-over-year. Are consumers concerned that inflation will outpace their wages? Meanwhile, mortgage rates have increased in October and November. What is the current volume of mortgage refinance applications? Tariffs currently account for two percent of net federal receipts, while individual income taxes and social insurance taxes make up the majority. If more tariffs are enacted, what is the projected impact on future net federal receipts. Tune in to learn more! Key Takeaways: • ISM Services at 56.0 • 30-year Mortgage at 6.79% • Personal Saving Rate at 4.6% in September

This week on “Inside the Economy”, we assess housing affordability, sales, mortgages, household cash on hand, and China’s demographics. Housing affordability is near a record low. How much would home prices have to decrease, or household incomes need to increase for affordability to return to the levels seen in the 2016-2019 markets? Total money-market fund assets are at a record $6.51 trillion, even though there aren’t any new flows into money markets. How are consumers using, or not using, their cash? Regarding China’s demographics, there have been significant shifts. What does the longevity of their nation look like, given the system-wide leverage disparity? Tune in to learn more! Key Takeaways: • 10-year bond yield at 4.21% • Unemployment at 4.1% • 30-year Mortgage at 6.54%

This week on “Inside the Economy”, we explore the levels of credit card debt, interest income, and relative insurance premiums across the United States. You may have seen news about credit card balances reaching an all-time high. However, did consumer credit card spending increase or decrease. What are the current levels of delinquencies on credit card debts? In other news, mortgage interest is not going higher, even with the rise in interest rates. How do home prices compare? What is the level of interest income paid out compared to mortgage interest? Regarding insurance, Colorado is on par with Florida concerning average annual insurance premiums. What has driven the increase in premiums in Colorado? Tune in to learn more! Key Takeaways: • 30-year Mortgage at 6.32% • Unemployment at 4.1% • U.S Net Wealth in Q2 at $152.8T

This week on “Inside the Economy”, we delve into existing home sales, the current and projected federal funds rate, and the implications of the Tax Cuts and Jobs Act. Existing home sales are trending downward - will the recent interest rate changes improve affordability for home buyers? How might these rate decreases impact the refinance market? As we look ahead, the target for the federal funds rate is projected to be 3.5% by next summer. Is this the soft landing we’ve all been hoping for? Additionally, deficit spending currently stands at -6.5% of GDP. Is this sustainable long-term? If the Tax Cuts and Jobs Act were to sunset, what would the implications be for deficit spending? Tune in to learn more! Key Takeaways: • Core PCE Inflation at 2.7% (YOY) • Crude Oil at $68.22 a barrel • Federal Funds Rate at 5%

This week on “Inside the Economy”, we evaluate consumer spending, the upcoming Federal Reserve meeting, and household income and mortgages. Consumer spending has slowed compared to the post-COVID highs, and we’ve observed a recent deceleration in student loan repayments. Is this a sign of consumer concern? Regarding income, U.S. households have seen an increase as of 2023 numbers. How does this compare to other countries worldwide? Have unions been a contributor to the increase in income? On the other hand, mortgages are a full point lower than they were a year ago. Is this decline due to economic factors or just anticipation? Tune in to learn more! Key Takeaways: • U.S. Head CPI is 2.5 (YOY) • 30-year Mortgage at 6.20% • 10-year bond yield at 3.68%

This week on “Inside the Economy”, we discuss the current state of employment, housing affordability, and U.S. Markets. Hiring has slowed since the post-covid highs. Are employed individuals at risk of losing their job? Is there evidence to support potential layoffs? On the housing front, affordability remains low due to factors such as pricing, cost of insurance, and interest rates. For consumers looking to buy, which markets have the best home value index in terms of the percent change from the 2022 peak? Regarding U.S. markets, recent adjustments have been made based on weakening economic data and the prospect of interest rates coming down. Since the markets are forward-looking, what momentum can we expect for the stock market in the second half of 2024? Tune in to learn more! Key Takeaways: • Crude Oil at $73.55 a barrel • 30-year Mortgage at 6.35% • 10-year bond yield at 3.86%

This week on “Inside the Economy”, we discuss consumer debt and the pending economic slowdown. Credit Card and HELOC balances have ticked up over recent months, but despite this, there has been limited delinquency in student loans, mortgages, and HELOCs. Auto loans and credit cards on the other hand have shown a slight uptick in delinquencies. What does that mean for the consumer as we move into the second half of the year? There is still lots of talk of “recession” on the horizon, as we see unemployment above 4%, but looking at the other data around the economy, does a slowdown seem more likely than recession? Revenue growth within the S&P 500, after a period of earnings recession, is beginning to normalize, reflecting a more balanced economic landscape. Tune in to learn more! Key Takeaways: • Headline inflation drops below 3% • Oil remains under $80 • Unemployment at 4.3%

This week on “Inside the Economy”, we explore unemployment, housing, and the federal budget. Regarding employment, the JOLTS three-month moving averages are trending downward. Additionally, permanent job losers and persons completing temporary jobs increased by 1.4% in July. If this figure reaches 2%, what might it indicate for the economy? In other news, Freddie Mac’s report on home sale prices shows a decrease year-over-year. Which markets are experiencing greater reductions in home sale prices? Will the overall housing market reach 2009 lows? The Federal Reserve has not materially shrunk the stock of money despite interest-rate hikes. Given the current money supply overhang, can the government stimulate a recovery? Tune in to learn more! Key Takeaways: • ISM Survey at 46.8 • Unemployment at 4.3% • 10-year bond yield at 3.99%

This week on “Inside the Economy”, we discuss housing, the Federal Reserve interest and Federal funds rate, and the Consumer Price Index (CPI). The Federal funds rate is currently higher than all main U.S. inflation measures. Is the cost of money greater than inflation by design? In other news, per the CPI Primary Shelter measure, rents continue to come down. However, mortgage interest as a percent of disposable income increased slightly. How does that compare to non-mortgage interest such as credit cards and auto loans? If there is a recession, would housing be the driver? Tune in to learn more! Key Takeaways: • 10 yr. bond at 4.2% • Industrial Production Output Index at 104.0 in June • U.S. Core CPI at 3.3 (YOY)

This week on “Inside the Economy”, we explore the broader economic indicators, such as U.S. gross domestic product (GDP), employment, and housing and vacancy rates. Overall U.S. GDP growth has slowed as a comparison of 2023 to 2024 quarter one readings. When might we see negative GDP growth? Will there be a recession? Government employment has recently stabilized and is back to its pre-covid trend. How does this compare to non-government jobs and unemployment? Lastly, home buying conditions are down. What does this mean for new home sales? Tune in to learn more! Key Takeaways: • U.S. GDP growth rate at 1.3% in Q1 • Unemployment at 4.1% • 30 yr. Mortgage at 6.95%

This week on “Inside the Economy”, we discuss payroll and job openings, market valuations, and foreign demand in U.S. markets. The rate of U.S. job openings has dropped from its post-Covid peak. Is this a negative event or normalization in the job market? In other news, there is a large disparity between the S&P 500 market capitalization as a comparison to the European market. Does this mean the U.S market is overbought? What does this tell us regarding the U.S. dollar as a currency? Additionally, foreign demand has increased in the U.S. market. What securities are foreign investors pouring money into? Tune in to learn more! Key Takeaways: • 10-year bond yield at 4.25% • U.S. Head CPI at 3.2 (YOY) • Unemployment at 4.0%

This week on “Inside the Economy”, we explore wages, housing prices and mortgages, and the U.S. financial conditions. The U.S. average hourly earnings report for May came in with a reading of 4%. Why are year-over-year wages still high? What would lowering rates do for wages? As for housing, renters are not experiencing an increased burden regarding their income spent on housing. How does that compare to the homeowner’s burden? In other news, U.S. financial conditions are easing with less liquidity issues. What was the U.S. financial conditions index at when the Federal Reserve started interest rate hikes? Tune in to learn more! Key Takeaways: • ISM Services at 53.8 • Unemployment at 4.0% • Aggregate delinquency rates at 3.2%

This week on “Inside the Economy”, we discuss consumer confidence, mortgage rates, and U.S. Markets. The May consumer confidence index report shows a higher than anticipated reading. Who is typically surveyed for the consumer confidence index report? As for interest rates, the Federal Reserve Board forecasts rates to decrease to 4% in the next two years. What is the forecast for mortgage rates? Lastly, Foreign investments in U.S. Markets eclipse $25 Trillion. Do countries like Singapore, Australia, or the U.K. have additional monies for future investment? Tune in to learn more! Key Takeaways: • Consumer Confidence Index at 102 • 30-Year Mortgage rate at 6.94% • Foreign Investments in U.S. Markets surpass $25T

This week on “Inside the Economy”, we evaluate employment, currency, and the importance of Natural Gas as a U.S. export. The recent job openings report shows a continued trend downward. What does this tell us about the trajectory of the U.S. economy? In other news, the U.S. dollar index continues to strengthen. How do global payments denominated in the U.S. dollar compare to other currencies such as the Euro? Lastly, the U.S. is a major exporter of Natural Gas. How much supply is left to keep the trend going? Tune in to learn more! Key Takeaways: • Total job openings at 8.5M • U.S. Dollar Index at 106.2 • ISM Manufacturing index falls below 50

This week on “Inside the Economy”, we discuss personal interest expense and changes in household debt. What category has the highest percent change from 2023? New home sales have slowed due to higher interest rates, but what does this mean for delinquency rates? Federal net interest outlays are climbing higher in amount as compared to historical data. However, how does the near 3% share of GDP compare to the past and is it necessarily bad for the overall economy? Tune in to learn more! Key Takeaways: • U.S. GDP growth slowed to a 1.6% rate in Q1 • Personal interest expense is approximately $500B • 30-year mortgage at 7.17%

This week on “Inside the Economy”, we monitor the increased consumer spending in tandem with rising delinquencies on mortgages. Is the Federal Reserve going to consider any rate hike movement before year-end? Consumers are still flooding into the stock market, alongside money flowing into money market bond funds. U.S. goods imported have remained steady or on the rise for most countries. What country is on the downward trend? Key Takeaways: • U.S. Head CPI at 3.5 (YOY) • Crude Oil at $83.71 • Credit Card account revolving balances exceed $600B

This week on “Inside the Economy”, we discuss the good news for consumers and bad news for the Federal Reserve. Spending on new manufacturing construction projects has increased. Does this emulate a contracting or expanding economy? How will the Federal Reserve react to the ISM Survey and Manufacturing data? Home prices are at a stabilization point and still have a negative year-over-year percent change. Will the consumer start flooding back in the market? Tune in to learn more! Key Takeaways: • ISM Survey at 50.3 • Durable Goods increased to 1.4 • Core PCE inflation rate slowed to 2.8% (YOY)

This week on “Inside the Economy”, we explore where the economic slowdown is coming and where it is not. Household credit card debt has increased over the past few years. The outstanding interest payments for non-mortgage debt even caught up with mortgage interest payments. Does this emulate a struggling consumer? Have consumers gone delinquent? Mortgage debt is steady at 50% of GDP. What is the foreclosure inventory as a comparison? Key Takeaways: • Core CPI at 3.8 • Job openings fell to 8.9 million in January • U.S. Foreign workforce increased 5% (YOY)