Growth Glance, Oil Influence & Tune Types

INSIGNIFICANT INFLATION

Inflationary pressures are very weak. Y-o-Y February CPI is 1.5%, with core CPI at 2.1%, both down from January. February producer price inflation was 1.9%, also down from January. Meanwhile, the Fed’s favorite inflation measure was 1.4% in January, the lowest rate since 9/16, while core was just 1.8%, an 11-month low. Add slowing growth and taming inflation expectations and the Fed can probably keep rates where they are indefinitely.

NATIONAL NUMBERS

Based on 4/19 IMF data and growth projections, US GDP will end 2019 at $21.3 trillion, China will follow with GDP of $14.2 trillion, then Japan at $5.2 trillion and Germany at $4.0 trillion. The big news; India will leapfrog both the UK and France to become #5 at $3.0 trillion. The UK will follow at $2.83 trillion, then France at $2.76 trillion. Tuvalu comes in last at $49 million.

PETROLEUM PROFITABILITY

For the first time ever, the profitability of the Saudi Aramco Oil Company was recently disclosed. In 2018, Aramco’s profit was a stunning $111 billion, easily dwarfing the world’s second most profitable firm Apple, which earned $59.4 billion. Apple is worth almost a trillion. Aramco is worth no more than $1.5 trillion as profitability is entirely dependent on oil. In 2016, when oil was cheap, Aramco earned just $13.2 billion.

JOLLY JOBS

March’s job report was virtually perfect. 196,000 new jobs, upward revisions of 14,000 for January and February, wage growth that is steady at 3.2% Y-o-Y, the broadest measure of unemployment at 7.3%, its best showing since 3/01, and hours worked up from 34.4/week to 34.5/week. This report suggests the economy is not slipping into recession but also isn’t running hot enough for the Fed to raise rates soon. Nice spot!

MILLENNIAL MILEAGE

While Millennials ride public transportation and use ride-hailing services, looks can be deceiving. After controlling for the impact of the Great Recession and other forces beyond their control, there is little difference in preferences for vehicle ownership between Millennials and prior generations. While Millennials are more likely to live in urban settings and marry later, all else equal they have larger families. Net net, vehicle ownership is just 1% lower.

MUSICAL MONEY

US music revenue peaked in 1999 at $21.5 billion (inflation adjusted). At that time, CD sales comprised 90% of revenues. Revenues bottomed in 2015 at about $7 billion (inflation adjusted), with sales evenly divided between CDs, MP3 downloads, and streaming. By 2017, sales had risen to almost $9 billion (inflation adjusted) with two-thirds of revenues coming from streaming, and one-sixth from CDs/vinyl and one-sixth from digital downloads.

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