Vorisek Financial Weekly Market Update for August 8, 2018

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Good morning!

Economists can debate if the +157,000 new net hires by US employers in July 2018 was enough to keep up with the growing American labor force.  What is not up for debate is how much better off millions of workers are today.  There are 6.28 million out-of-work Americans as of 7/31/18, equal to a 3.9% jobless rate (i.e., 156.0 million Americans have jobs).  Just 9 years ago (7/31/09), 14.60 million Americans were out of work and the nation’s unemployment rate was 9.5%, on its way to a peak jobless rate of 10% in October 2009 (source: Department of Labor).        

The American economy, by many measurements, is booming: robust growth of +4.1% in the 2nd quarter 2018; an unemployment rate of just 3.9%; a domestic stock market (using the S&P 500 as the benchmark) that is up +7.4% YTD (total return); a nearly 9 ½ year bull market run for stocks that has produced an annualized return of +19.0% per year; an increase of +1.8 million new homeowners in just the last 12 months.  Coming out of the Great Recession of 2008-09, Americans that had money in real estate and in stocks have flourished (source: BTN Research).             

The last bank in the US to fail and require a federal bailout occurred nearly 8 months ago.  During the 3 years 2009-11, a staggering 389 banks failed, an average of 11 per month.  Of the 536 bank failures that have occurred in the USA during the 15 years ending 7/31/18, more than half have taken place in just 4 states.  51% of the bank failures (271) have happened in Georgia (92), Florida (73), Illinois (66) and California (40) (source: Federal Deposit Insurance Corporation). 

Notable Numbers for the Week:

  1. WHAT HAVE YOU DONE LATELY? - Of the 27 stocks in the S&P 500 index that gained at least +60% in 2017, 9 of those stocks have a negative return YTD through 7/31/18 (source: BTN Research).

  2. SIGNIFICANT - 19% of the US population is currently receiving a monthly benefit payment from Social Security, i.e., 62 million beneficiaries out of 328 million Americans (source: Social Security).  

  3. OVERSPEND - During the first 7 months of 2018 (i.e., 1/01/18 to 7/31/18), the total outstanding debt of the US government increased by $820 billion to $21.313 trillion (source: Treasury Department).  

  4. MID-TERMS - Democrats lost 63 House seats and 6 Senate seats in the November 2010 elections, i.e., the first mid-terms during the Obama administration.  The first mid-terms during the Trump administration will take place on 11/06/18 or 3 months from today (source: Congress). 

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