Excellent Employment, Inflated Autos & Confident Consumers

JUMPIN’ JOBS

Following a weak September in which job creation totaled a mere 118,000, October’s 250,000 was a pleasant surprise. Job growth over the last three months has averaged a robust 218,000. Moreover, every sector gained employment. Better yet, the unemployment rate held steady at 3.7% as the labor force participation rate rose from 62.7% to 62.9%. For workers aged 25-54 it rose to 82.3%, its best level since May 2010!

MORE MONEY

The most recent Employment-Cost Index, which looks quarterly at wages and benefits paid to civilian workers, and another survey that looks at hourly earnings/month both showed wages rising at an annual rate of 3.1%, the fastest since 08Q3 and 9/09, respectively. Importantly, these increases remain non-inflationary as annual wage growth minus labor productivity growth (1.3%) is 1.8%, below the Fed’s 2% inflation target. The labor market can get still tighter.

CRUDE CONCERNS

With oil prices down 25% due to rapidly rising supply, slowing world growth, and more waivers than expected for Iranian oil purchases by nations such as China and India, OPEC has two unpleasant choices. Cut production to keep prices up but inevitably lose market share to US frackers, or keep production steady, protect its market share, and really hope US shale production at least temporarily plateaus due to lower prices.

COPIOUS CONFIDENCE

According to the Conference Board, consumer confidence rose to 137.9 in October, its highest level since 9/00. According to the University of Michigan, consumer confidence is at 98.60, down slightly from the 3/18 reading of 101.4, the best reading since 1/04. While stock market declines and gyrations are a concern to wealthier Americans, job prospects are what matters to the middle and lower classes, and they are excellent!

COSTLY CARS

The price gap between new and used vehicles is as wide as it’s been in years, pushing buyers towards used cars. New cars are bigger, come packed with fancy technology, and average almost $37,000. Conversely, a used 3-year-old car costs $23,000 despite rising in price due to reduced repossessions and fewer vehicles coming off rental car fleets. In 8/18, the average new car payment was $536/month, vs. $507/month in 8/17; $463 in 8/13.

LUXURIOUS LIPSTICK

Used first by Queen Puabi of Ur approximately 4500 years ago, global lipstick sales totaled $11.2 billion in 2017. Outside of the $14 million H. Couture Beauty Diamond Lipstick, that comes in a diamond encrusted case, the costliest lipstick is La Bouche Rouge for $160; refills cost $37; yes, it’s refillable. Isn’t that comforting! Next at just $90/tube is Christian Louboutin’s Lip Color; it’s apparently quite luxurious.

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