November Economic Roundup
Global economic growth is expected to be 3.6% this year and 3.7% next year, up pleasantly from 3.2% in 2016.Better yet, all 15 nations that the IMF individually follows are growing. As for the US, after 1.5% growth last year, 2017 looks to show 2.1% growth and next year, 2.3%. China will grow fastest at 6.8%, edging out India at 6.7%, but India should top the charts in 2018.
Falling Fuel Deteriorating Deficit
In FY2017, the federal deficit widened to $666 billion or 3.5% of GDP, up from $586 billion or 3.2% of GDP in FY2016. The deficit has averaged 3.1% over the last 40 years. While receipts rose to $3.315 trillion, up from $3.267 trillion in FY2016, expenditures hit $3.981 trillion or 20.7% of GDP, up from $3.852 trillion. A rising deficit this late in a recovery is troubling.
Despite confusion wrought by hurricanes Harvey and Irma, September’s employment report was stellar. Upward revisions to wage growth totaling three-tenths-of- one-percent for July and August and a 0.5% rise in September suggest wages are rising! Moreover, the unemployment rate declined to 4.2%, its best level since 2/01, and the labor force participation rate rose to 63.1%, best since 3/14. These numbers all but guarantee a December Fed rate hike of 0.25%.
US households spent slightly less than $2,000 on gasoline in 2016, the lowest inflation-adjusted amount since 2003. The lowest amount spent on gasoline since 1980 was $1,500 in 1998, while the highest was about $3,300 in 1980 and 2012. However, as a percent of before-tax household income, gasoline spending was 5% in 1980, 4% in 2012, and just 2.2% in 2016, all due to slowly rising incomes.
According to the American Hospital Association, from 1995 through 2014, inpatient admissions to hospitals rose by just 7.6%. By contrast, outpatient visits to free-standing emergency rooms, clinics, urgent care facilities and micro-hospitals rose 81%. Non-hospital operations generate lower revenues but also higher profits as they have less overhead, fewer specialists and less fancy equipment. This is partly why Y-o-Y healthcare inflation has declined from 5% to 2%. Bye-bye hospitals.
For the year ending 6/17, the world’s highest paid athlete was soccer star Cristiano Ronaldo, who earned $93 million, followed by LeBron James, who brought home $86 million. Another soccer player, Lionel Messi was third with $80 million while tennis star Roger Federer was fourth at $64 million. The top 100 athletes earned a combined $3.1 billion, and the threshold to make the list; $21.4 million.
Source: Elliot Eisenberg, PhD., Chief Economist for GraphsandLaughs, LLC, an economic consulting firm serving a variety of clients across the United States. All rights reserved.