The Weekly Update 9/6/2024

The St. Louis Federal Reserve Bank releases a monthly report titled “Personal Current Taxes”.  This is one piece of anecdotal evidence I look at each month to measure the health of our consumers.  We want financially healthy consumers, as they represent 68.3% of the entire U.S. Economy (Source J.P. Morgan Guide to the Markets 6-30-2024).

Per the most recent Personal Current Taxes release, personal taxes paid to the U.S. Treasury are almost back to the June 2022 all time high at a nick over a $3 trillion annualized rate.  This suggests the consumers are earning money, paying taxes on it and spending.

Since January 2024, gasoline at the pump has dropped from $3.79 to $3.33 per gallon.  Down .46 cents per gallon (source: www.gasbuddy.com 8/29/2024).  Per our friends over at Consumer Metrics, each 1 cent reduction in gasoline frees up about $1billion per year in consumer disposable income, thus almost a $46 billion bump up in disposable spending, annualized year to date.

This month Personal Consumption expenditures were up .40% and up +2.5% year over year (YoY).  This is a reduced growth rate from 2023’s +3.40%, yet it is still a solid rate of growth.

In addition, PCE is the Federal Reserves favorite measure of inflation.  So, from a reduced interest rate point of view, a reduction from last years +3.40% down to +2.50% is positive.  The Feds target inflation rate remains 2%.  It would be normal, and still positive, to see PCE contract down closer to 2%, yet still expanding.  This appears to be less positive to some economists but, even at +2% per year expansion on a nearly $29 trillion economy is in a word, outstanding.

Yes, the world has always been a scary place. Get over that and focus on key facts like this one!

I did not say market valuations go straight up, and I did not say without volatility, yet the data flow suggests the good old USA is just waking up from the post Covid hangover. The outlook is that this could be a 10 ticket ride up the net worth curve.

I’m interested in your thoughts, comments and observations. Feel welcome to call, email, or stop by the office and say Hi.

Respectfully,

James O. Lunney, CFP®

CERTIFIED FINANCIAL PLANNER™ Professional  

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