PMI, Consumer Credit, Jobs, Home Sales, Boomers & Zoomers, GDP, and How Much is that Seahawk in the Window?
The Numbers
It was a pretty ‘meh’ week.
The US Services PMI came in at 51.2 vs 50.7 in May. Meh.
Just a reminder, anything over 50 indicates expansion and under 50 indicates contraction. It’s expanding a little bit.
This is a measurement of the service industries, NOT manufacturing, but it is key because 70% of our economy is service-based.
Let’s talk Consumer Credit.
Total consumer credit decreased $180,000,000 last month.
It sounds like a lot, but the previous month, it grew by $20,800,000,000.
Revolving credit contracted at a 4.7% annual rate, but term credit – auto, student loans etc. continued to grow at a 1.6% annual rate.
Always try to pay down that revolving credit; you can always borrow it back.
Weekly jobless claims continued at the same clip – 215,000 – as the month before, and within the average range. Meh.
Finally, existing home sales continue to be weak, with June running at an annualized 4,100,000. So, what does ‘weak’ mean?
The last time existing home sales were that low, Toy Story came out (the first one), the Macarena was a thing, O.J. was on trial, and your IT department was upgrading your desktop to Windows ’95. And I was still at my first bank.
It almost got that low in 2008, but not quite.
And the population of the U.S. has increased 70,000,000 since 1995.
See the next section for snarky comments on all of this.
There is a lot of economic numbers being released this coming week, key among them is the CPI, the Consumer Price Index. Last month, the CPI was up 4.1% and expectations are for it to go down to 3.8%.
Fingers crossed.
Boomers, Zoomers and Housing
Redfin calculated a 79.9% homeownership rate for Boomers in 2023, holding 40% of the housing stock.
Boomer ages range from 62 to 80, and there are roughly 40,000,000 Boomer-headed households nationally, with some estimates higher.
With an 80% ownership rate, that makes about 32,000,000 Boomer-owned homes. Some estimates have that number at 40,000,000 out of approximately 100,000,000 residences, not including apartments.
But that’s not the point.
The point is that over the next 20 years, most of the Boomers will have passed on or be in a senior care facility, having in-depth discussions about the good old days, and complaining how those Zoomers didn’t want to pay them what their home was worth and why do those miscreants work from home anyway?
Recognizing that 15% will live past their shelf life (like me), that’s at least 27,200,000 homes that will get put on the market in one of three ways:
It’ll get sold to pay for the admission fee to the Luxury Oaks Lazy Daze Continuing Care Retirement Community.
It’ll get passed down to ne’er-do-well family members who will then sell them to aforementioned Zoomers.
It’ll get sold as the Boomers downsize to senior living communities in Tucson, Flagstaff and Vegas.
Folks, over the next 20 years, the supply will increase significantly. Because when you add 1,360,000 home sales each year, that increases the existing sales number by 34%, taking it to 5,420,000 a year. Yes, some of those numbers are already baked into existing home sales, but there will be an impact.
Oh, and by the way, U.S., deaths will start exceeding births in 2033; throw that into the mix for housing needs. Who needs a four-bed, 2.5-bath house when you don’t have any kids?
Global GDP
Kiplinger released GDP (Gross Domestic Product) estimates for the world for 2026 and 2027. They are:
Global - 2.8% and 3%
USA – 2.1% for both years
Eurozone – 0.8% and 1.3%
Japan – 0.4% and 0.6%
China – 4.5% and 4.2%.
India – 6.5% and 6.7%
Canada – 1.1% and 1.8%
Mexico – 0.9% and 1.9%.
India is the new China, except with a caste system.
China’s GDP will continue its downward trend as the population decreases and ages, using up a disproportionate amount of public services.
China’s population peaked in 2020 at approximately 1,426,000,000 and currently sits at 1,413,000,000, dropping by 8,456 people each day, including births.
Not to be left out, India’s population will be peaking in 2060 at 1,700,000,000 people.
They are currently at 1,476,000,000.
The USA will peak in 2056, as estimated by the Congressional Budget Office. Oh, boy.
Reader Poll Results
In last week’s issue, I mentioned that I thought the two words that a business owner needs to have are Initiative and Persistence. Some readers had their own contributions:
Integrity & Adaptability
Courage & Confidence
Passion
Flexibility and ‘thinking outside the box’
Optimism – This too shall pass
All of these are integral to an owner’s success. And if you are at the end of your rope, just remember: this too shall pass.
How much is a Seahawk that is a Super Bowl champion, even if it is from Seattle?
$9,600,000,000. As a reminder, the Seahawks of Seattle are an American football team, not to be confused with the World Cup sport that 47 visiting countries call football.
A mere three years ago, the Washington Commanders were sold for $6,050,000,000, but they were NOT Super Bowl Champions.
The Seahawks were purchased by a family headed by the co-founder of Sun Microsystems, Vinod Khosla.
He has a fractional ownership of the 49ers of San Francisco and will have to divest that ownership.
He was also an early investor in DoorDash, Instacart, and OpenAI.
When he invested $50,000,000 in OpenAI in 2019, he was quoted as saying:
“To do something exceptional, you have to do something out of the ordinary, and that usually means risk.”
Every business owner is acutely aware of that.
Housing in the big cities will continue to be a problem for the near future, but give it time and it will resolve itself. Except on the coast because everyone loves living on the water.
This Wednesday is National Hot Dog Day! If you can’t make it to Pink’s, go for an AM/PM Jumbo Spicy Hotdog. Eat enough of those and I promise you’ll end up with two stents in your anterior descending artery by the time you are 61.
57 Years Ago This Week: On July 16, 1969, Apollo 11 launched to the moon. The mission required more than 400,000 engineers, scientists, and technicians and cost roughly $24 billion in 1960s dollars. It remains a reminder of what can happen when a nation commits its talent and resources toward a single ambitious goal.
