PERSONAL INCOME AND OUTLAYS, FEBRUARY 2018
Personal income increased $67.3 billion (0.4 percent) in February according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $53.9 billion (0.4 percent) and personal consumption expenditures (PCE) increased $27.7 billion (0.2 percent).
Real DPI increased 0.2 percent in February and Real PCE increased less than 0.1 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.2 percent.
The core PCE deflator is +1.6% YoY but last 3 months: +2.8% a.r., same as total CPI.
U.S. Pending Home Sales Improve
The National Association of Realtors (NAR) reported that pending home sales increased 3.1% (-4.1% y/y) in February to an index level of 107.5 (2001=100). The gain followed a downwardly revised 5.0% January decline. Winter storms and a low supply of homes on the market were indicated by the NAR as holding down recent sales.
Pending sales improved in each region of the country, led by a 10.3% rise (-5.1% y/y) in the Northeast following a 9.0% fall. Sales in the South increased 3.0% (-1.5% y/y) after a 3.8% decline. Sales in the Midwest improved 0.7% (-9.5% y/y) after a 6.6% shortfall, while sales in the West rose 0.4% (-2.2% y/y) after a 2.6% decline.
- Growth in the number of households that rent is expected to remain above that of homeowners. (The Daily Shot)
Source: John Burns Real Estate Consulting
Reis: Apartment Vacancy Rate increased in Q1 to 4.7%
Reis reported that the apartment vacancy rate was at 4.7% in Q1 2018, up from 4.6% in Q4, and up from 4.3% in Q1 2017. This is the highest vacancy rate since Q3 2012. The vacancy rate peaked at 8.0% at the end of 2009, and bottomed at 4.1% in 2016. (…) With more supply coming on line – and less favorable demographics – the vacancy rate will probably continue to increase in 2018.
Truck Driver Salaries Rising on Surging Freight Demand
The American Trucking Associations, a trade group that represents fleet owners, said annual truck-driver salaries rose between 15% and 18% from 2013 to 2017, with growth varying based on the type of fleet and the nature of the routes.
Some private-fleet drivers earned as much as $86,000 annually in 2017, up from $73,000 in the group’s 2013 survey, on top of benefits packages that included new paid leave offers and more-generous retirement plans. The survey showed the median salary for a truckload driver working a national, irregular route—essentially an entry-level driving position—was $53,000, up $7,000 or 15% from 2013. (…)
Trucking companies (…) have added anywhere from one to several cents per mile to their driver compensation this year. Chattanooga, Tenn.-based U.S. Xpress Enterprises Inc. last month said it would offer bonuses that could bring drivers an extra $50,000, based on incentives.
The pay increases and tight capacity are hitting retailers and distributors with higher shipping costs. (…)
Fed’s Harker, Seeing Stronger Inflation, Lifts His Outlook for Interest Rates Philadelphia Fed chief expects three rate increases this year, up from his previous view of two
(…) The pace of any movement in price pressures requires as much attention as the level of annual price rises, Mr. Harker said. Inflation that rises rapidly past 1.9% annually would be more troubling than 2.1% inflation that is creeping slowly higher, he said.
Mr. Harker said the risk of increased trade tariffs and other barriers presented one source of uncertainty about current projections of the interest-rate policy path. “Trade tariffs increase costs,” he said. (…)
U.S. Fiscal Future Won’t Be Like Its Carefree Past The country is shrinking its tax base just as interest expenses surge and social programs get harder to cut
(…) In the U.S., interest swallowed 8% of federal revenue last year, the highest of all AAA-rated countries. As interest rates return to normal and debt keeps rising, Moody’s thinks it will hit 21.4% in 2027. (…)
Republicans adamantly oppose tax increases, and indeed just passed a tax cut on party lines that is projected to slash revenue to just 16% of GDP, a level normally only seen when the economy is weak, not at full strength as it is now. (…)
Moody’s says in a crisis wealthy countries in theory can tolerate lower social benefits because that doesn’t impoverish people. But it goes on to note that income inequality and poverty are both higher in the U.S. than among its wealthy peers, and thus “it may have less flexibility” to cut entitlements. (…)
Why Are States So Strapped for Cash? There Are Two Big Reasons
(…) Medicaid, the state-federal health insurance program for the poor and disabled, and public-employee health and retirement costs.
These days, they consume about one out of every five tax dollars collected by state and local governments. That is the highest share since Medicaid was created in 1965. Postretirement health benefits, which are harder to quantify, add to that burden and have cumulatively cost states more than $100 billion since 2008, according to government financial disclosures compiled by Merritt Research Services.
Those costs are outpacing growth in tax revenue year after year. In 2016, state and local governments collected about $136 billion more in taxes than they did in 2008, adjusting for inflation. Two-thirds of those additional dollars went to fund pensions and Medicaid, according to a Wall Street Journal analysis of Commerce Department spending data. (…)
Twenty-two states faced budget shortfalls in 2017. Ten couldn’t agree on a new budget before the start of their next fiscal year. Illinois’s credit rating was downgraded nearly to junk status.
To save money, states are sending less aid to cities. Many cities, in turn, are increasing fees and fines on everything from garbage collection to parking tickets. Others, such as Hartford, Conn., have teetered on the brink of bankruptcy.
The cash crunch is likely to get worse. Federal actuaries predict that Medicaid’s annual cost, which was $595 billion in 2017, will exceed $1 trillion in 2026. States and many localities pay about 38% of that tab. The remainder is covered by the federal government. (…)
Source: The Daily Shot
THE SITTING BULL
NATO Moves Toward Readying More Troops to Confront Russian Threat Europe has more than a million troops in its armies, but military planners fear those ready for rapid deployment in a conflict with Russia would only be counted in the thousands. NATO, at U.S. urging, is working to change that.
Barrick Gold founder and philanthropist Peter Munk dies at 90
Great person, great businessman.