The Trump White House believes the “Tax Cuts and Jobs Act” legislation, signed by the president on 12/22/17, will create +3% annual economic growth in the USA, a level last achieved in 2005. The US economy produced annualized growth of +3.2% during the first 6 months of 2018, reaching $20.4 trillion in size as of 6/30/18. Surprisingly tax reform will be back in the news this week in Washington as the House Ways & Means Committee debate an extension of the new tax cuts even though they are already in place for another 7 years until 2025 (source: Congress).
Average hourly wages of private sector workers climbed to a record $27.16 (equal to $54,000 in annual compensation) in August 2018. That hourly rate is up +2.9% over the last year (i.e., August 2017 to August 2018) and represents the best year-over-year bump in wages since May 2009. Economists have been at a loss to explain the meager wage gains achieved in the recent past while the jobless rate has tumbled below 4%. The strong wage gains along with 201,000 new net jobs last month increases the probability of another Fed rate hike when they meet in 2 weeks on September 25-26 (source: DOL).
It has been 10 years since Treasury Secretary Hank Paulson announced on 9/07/08 his plan to take control of mortgage giants Fannie Mae and Freddie Mac. The government initially pledged up to $200 billion of financial support in anticipation of future mortgage defaults, ultimately disbursing $187 billion. The controversial bailout was not a financial failure: Fannie and Freddie have paid back $271 billion to taxpayers over the decade, resulting in an $84 billion profit (source: Treasury Department).
Notable Numbers for the Week:
OUR NEIGHBORS TO THE NORTH – Approximately 75% of $421 billion of goods exported by Canada in 2017 (stated in US dollars) was purchased by American consumers (source: WTEx).
SPENDING WAY TOO MUCH - 71% of 251 economists surveyed in late July 2018 believe the current fiscal policy of the US Congress is “too stimulative,” a significant jump from the 20% of economists who felt that way in August 2017 (source: National Association for Business Economics).
GRADUAL INCREASES - Between June 2004 and June 2006, the Fed met and raised short-term interest rates by ¼ of 1% at 17 consecutive Fed meetings. Since 12/14/16, the Fed has met and raised short-term interest rates by ¼ of 1% at 6 of the last 14 Fed meetings (source: Federal Reserve).
NO PILOTS - The Navy awarded an $805 million contract on 8/30/18 for the construction over the next 6 years of 4 unmanned tanker planes that will be able to refuel fighter jets in mid-flight (source: Navy).
This message and any attachments contain information, which may be confidential and/or privileged, and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by email or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing e-mails from this sender, please reply to this email with the word REMOVE in the subject line. By industry regulation, we cannot accept time-sensitive information via e-mail. If you would like to execute a trade or if you have time sensitive information for me, please call my office. We cannot guarantee receipt of, nor the timing of placement, for investment orders received via e-mail.
If you do not want to receive further editions of this weekly newsletter, please contact Jayne Weddington at 614-431-4328 or e-mail us at email@example.com. You may also write us at 300 W. Wilson Bridge Rd., Suite 320, Worthington, OH 43085. Securities and Investment Advisory Services offered through FSC Securities Corp., a broker/dealer and registered investment advisor. Member FINRA/SIPC. Vorisek Financial Corporation is not affiliated with FSC Securities Corporation or registered as a broker dealer or investment advisor.