Home Sales, Trimmed Mean PCE, Stopgap Spending, MLB, and Gen Z Discovers Platinum
The Numbers… were up and down, so says Captain Obvious.
New home sales for July seemed to confirm the trend discussed last week with building permits and builder confidence. They came in at an annualized rate of 607,000. Last month's number was 628,000; expectations were 615,000.
This was down 13.5% from a year earlier.
I’m not liking the trend, but the numbers are all lumped together and are not indicative of some of the regions. Let’s look at that.
Northeast – down 27.1% - yeah, no one’s looking to live in the snow.
West – down 13.8% - Just too darn expensive to live there.
Midwest – down 5.0% - a lot better than the Northeast. It seems some folks are choosing the flyover states.
South – down 4.9% - construction expenses and hassles are a lot lower than the West.
That’s what higher interest rates will do. It tells me that the builders are thinking rates are not going down anytime soon, which crimp their ability to sell new homes.
The PCE – personal consumption expenditures – index came out. Let’s look at the standard numbers.
The headline PCE came in at 3.7%. Last month it was 3.7%, and expectations were 3.7%. Batting 1.000 so far.
The Core PCE came in at 3.3% across the board. Another 1.000.
It turns out the Dallas Federal Reserve Bank tracks another version of the PCE. It’s called the Trimmed Mean PCE.
That came in at 2.3%. Time to get into the PCE weeds!
The Trimmed Mean PCE removes price changes that are unusually large, regardless of category. The cynical side of me thinks that’s too convenient.
If airline fares, eggs, gasoline, insurance, or medical costs have an extreme move, those outliers get trimmed away.
This makes sense to a certain degree. It would better indicate general inflation because you are removing specific items, rather than whole categories like food and fuel.
The Fed uses the Trimmed Mean not as a goal – it’s the entire PCE that they want to get down to 2% - but as an indicator of the impact and direction of inflation.
That’s a long way of saying that it gives the Fed a reason to NOT look at raising rates anytime soon.
Finally, personal income was up month over month at 0.4%. At least it’s keeping slightly ahead of inflation, and that’s always a good thing.
Christmas Vacation, anyone?
So, on October 1, there needs to be a new budget in place for the U.S. Government, or at least a stopgap spending bill. Otherwise, there is a shutdown. Again.
Well, the House and the Senate have done just that; the two separate bills just need to be reconciled.
That’s where the key players go out for drinks on Thursday night and figure out what they like and don’t like about each bill and jot it down on a napkin and bring it in on Friday morning for the Gen Z staffers to wordsmith.
The good news: the odds are good that a reconciled bill will happen. I’m just kidding about the Thursday night thing, but you get the picture.
The bad news: the stopgap bill will only kick the can to sometime in December.
By that time, the November election results will be tabulated (except for California; they’ll still be counting the votes), and then the mudslinging can begin.
Speaking of stopgaps…
Guess what else expires in December?
No, not the almond milk you bought this weekend. That expires in November. Really.
The collective bargaining agreement with… the players union. The who?!
It’s Baseball’s Winter Classic: the Owners of the Major League Baseball vs. the Baseballers of the Players Union, and they are not really close to making a deal.
The owners want a salary cap, and the players want a bigger piece of the revenue share.
The minimum wage for an MLB player is $780,000, assuming they are on the roster for the whole year.
The current contract expires December 1. The season is done by then, so no one will notice. Until April.
Headline: Gen Z Discovers the Premium Rewards Credit Card
The generation that is complaining that Boomers had an easier financial path is voluntarily paying for an $895 American Express Platinum or $395 for Gold? Out of college??!!
I feel a rant coming on…
Millennials are part of this too, evidently, but at least they are not right out of college…
Evidently the “freebies” are irresistible. While the user is rewarded with concierge services, exclusive dining, airport lounges, and earning usage points, you arguably need a minor in mathematics to figure it out.
Or an AI agent, I guess.
More than 75% of American Express’ new premium sign-ups are Zoomers and Millennials. In exchange for the mathematical gymnastics, they are earning rewards for DoorDash, access to airport lounges, and the chance to buy tickets to concerts and other events.
Boomers, on the other hand, will get their own food (unless it’s pizza) and scoff at the idea of paying anything to lounge in an airport; the ticket is expensive enough. The concert depends on who it is; The Eagles are fine, but not Taylor Swift, unless the grandkids want you to take them.
Because we will do ANYTHING for our grandkids.
Now that I think about it, if Zoomers would spend as much effort and time saving money as they do on earning points and spending benefits for experiences, they would be in houses a lot sooner. Just sayin’.
Despite my ranting, at the end of the day, it’s all about priorities. It’s a much different set of priorities between Zoomers and Boomers. As a business owner, you must know who your product is targeting.
So, who is your target market? If it’s Boomers, that market shrinks by roughly 17,000 each week; we lost Dolly Parton and Tim Curry this week. If it's Zoomers, you better focus on the experience; keep in mind that their earning power is growing daily.
This week’s quote is from a young Millennial, Dua Lipa.
“I always told myself never to have a plan B. I feel like that’s also one of the reasons I’m doing what I’m doing now, because I just never really rested until I got here.”
Just keep swimming.
