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HIRING NOW

America has 7.3 million available jobs – the most job openings recorded in nearly 20 years.

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Who’s Hiring?

Construction
Hotels & Restaurants
Healthcare

Who’s Hiring Less:

Manufacturing
Federal Gov’t
Retail

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Why It Matters:

  • The trend of a tight labor market continues; a double-edged sword.
  • Positive: Reflects a good economy. Businesses hire when they need & can afford help. A lack of fulfilled jobs may lead to higher pay for current workers.
  • Negative: Job quality matters. Wages haven’t risen dramatically (in step with out boom periods); economists wonder why.
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“The labor market continues to heat up. But growth cannot continue for much longer if there is no one out there to work in the factories and shops and malls across America.”

Chris Rupkey, chief economist at MUFG, raising concerns that if companies struggle too much to find workers, it can actually hurt the economy by slowing production.
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The most recent data from the end of December 2018 shows there are currently more job openings in America (7.3M) than unemployed people (6.3M). Typically, the opposite is true - the unemployed outnumber job openings.

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Hurt In The Heartland

From meat to milk and the vegetables in between, more American farmers filed for bankruptcy last year than during the financial crisis a decade ago.

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“I’ve been through several dips in 40 years. This one here is gonna kick my butt.”

Kirk Duensing, Nebraska Farmer, who says low prices for soy & corn crops combined with high interest loans has left him more than $1M in debt. He has sold land and equipment to try to stay afloat.
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Why Now?

  • Oversupply of crops (at home & overseas) fuels lower prices.
  • High Debt – Farmers currently carrying the highest debt in 4 decades (in part because of borrowing to cover several years of low crop prices).
  • Trade: Tariffs (or taxes) on American grown crops exported to China or Mexico hurts farmers on top of the depressed prices.
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“We thought 2019 would be the year things turned around. Then the trade dispute happened and that really put a damper on things.”

Curt Hudnutt, Head of Rural Banking for Rabobank, one of the biggest U.S. farm lenders, warning bankruptcies among U.S. farmers will increase. The majority of farms lost money last year.
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Why It Matters:

Your Kitchen Table: “…bankruptcies are climbing across swaths of the Midwest that produce much of the nation’s grain and meat.” (WSJ)

Your Tax Dollars: Pres. Trump created a $12B fund to help subsidize farmers impacted by trade disputes. Only a portion of the funds have been accessed.

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The downward trend in prices is predicted to continue for U.S. farmers. U.S. Treasury Sec. Mnuchin is in China today, where he will continue trade talks this week ahead of the March 2nd deal deadline for the two sides to set new terms or continue the trade war.

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TAX TIME

As of this week, the IRS is now accepting your 2018 taxes!

While most Americans got a refund last year, averaging about $3,000, the same may not be true this year.

But it’s not all bad news.

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What’s New This Year?

  • The 2017 tax code overhaul was biggest change since 1986.
  • Many benefited from tax reform (ex: lower rates), but deductions changed, causing confusion.
  • If you didn’t update your paycheck withholdings, you may have higher take-home pay, but now owe Uncle Sam.
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“We worry very much that there will be a perception that ‘My refund went down, I’m in a worse economic position.’ When, in fact, the reality could be the opposite.”

Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc. Although refunds *may* be lower for some, the tax cuts might've provided benefits throughout the year. If you feel discouraged by your tax refund, remember you may have benefited in other ways.
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On The Flip Side:

“For your average taxpayer it’s going to be a record high tax refund season. Much higher than they expected.”

Ellen Zentner, chief United States economist Morgan Stanley. Bottom Line: There's some uncertainty over refunds for 2018 filings. Some Americans will receive a higher refund vs. 2017 taxes due to new tax code; some less.
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Tax Prep Tips

  • Its hard to do…but try to do your taxes earlier than later, to eliminate any surprises.
  • Check with your tax preparer about whether or not your withholdings need updating.
  • Folks who took a lot of itemized deductions or have a two-income household are “more likely than others” to see changes in their refunds” (WSJ).

 

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Why It Matters:

  • 154 million expected to file taxes (60% of U.S. adult population).
  • Consumer spending is a major impact on the overall economy.
  • Verdict is out on whether tax refund *itself* is an economic stimulus.
  • Remember: you only get a refund if you OVERPAY your taxes. Ultimately the goal would be to get zero refund!
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Despite the recent shutdown that impacted 7 out 8 IRS employees, refunds are expected to be "on time" (approx. 3 weeks from filing). If there's another shutdown, we'll be in uncharted territory again.

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OIL’S MAGIC NUMBER

Not too high… not too low… what is the best price for oil?

As crude plummets 30% in 2 months, consumers cheer, but the industry worries.

The debate as the world’s largest energy producers meet.

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Oil’s Slippery Slope

  • What? Oil traded at 4-year high in October at $76/barrel and the talk at that time was that $100/barrel was next. Today, it’s trading below $50/barrel.
  • Why? There’s too much oil. U.S. crude inventories have climbed 10-straight weeks to the highest level in a year, just as concerns grow over a global economic slowdown with less oil demand.
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“Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! …Thank you to Saudi Arabia, but let’s go lower!

President Trump tweet on Nov. 21st
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What is the Perfect Price?

Goldman Sachs warns $50/barrel oil is not good for America, instead says a $65 to $70/barrel range is best for all.

“When you’re in that level it’s not too high & damaging the consumer, but at the same time, it creates a stable environment for the industry.”

Jeff Currie, Goldman Sachs head of commodities research
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Why It Matters

As of August, U.S. is now the world’s largest oil producer. Falling prices may weigh heavily on an industry that now represents a larger share of the U.S. economy.

While lower oil prices boost consumers, ultimately energy producers will be forced to cut back, laying off workers which may send prices ultimately spiking higher.

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Organization of Petroleum Exporting Countries (OPEC) meets Dec. 6th. Its de facto leader Saudi Arabia is arguing for a cut in supplies to prevent a glut. But first, strategists will watch Friday's G20 meeting, including the Saudis, Russia, & U.S., for hints on what's next.

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HONEYMOON OVER?

As more Americans say
“I don’t,” the nation’s largest wedding retailer, responsible for selling 1 out of every 3 bridal gowns, files for bankruptcy.

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David’s Bridal Files for Bankruptcy

  • Owes creditors nearly $1B.
  • Filing for bankruptcy to restructure its loans with lenders, hopes to complete process by January.
  • 300+ stores to remain open.
  • Orders & appointments won’t be disrupted.
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“Newer entrants feel fresh and contemporary. By comparison, David’s Bridal appears stuffy and old-fashioned.”

Neil Saunders, managing director at GlobalData Retail, on how David's Bridal, which is known for selling affordable wedding gowns below $2,000, has become less relevant in the face of online competition and upstarts like Floravere, Anomalie, & Anthropologie.
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Big Picture

  • Marriage rate has steadily declined since 2000.
  • Fewer weddings = fewer brides.
  • BUT those who do get married, pay more on average for a wedding dress (approx $1500).
  • Bottom line: David’s Bridal caters to lower price gowns so to make $ they need a high volume of weddings – that’s just not happening right now in America.
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It's not just David's Bridal... Banana Republic, J. Crew, & Alfred Angelo have all closed down bridal shops in the past 2 years. In business for 60 years, David's Bridal will have to figure out how to reach a modern bride at the right price point.

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KEURIG FOR COCKTAILS

Could THIS gadget be the fix for slumping beer sales?

 

 

Anheuser-Busch hopes so.

 

 

 

 

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NEW ON TAP

  • Drinkworks Home Bar creates “bar-quality drinks at home.”
  • For now, makes 15 different drinks like a Moscow Mule, Cosmo, Sangria, White Russian & beer – alcohol included in pod.
  • Drinkmaker costs $299, cocktails $3.99/pod & beers $2.25/pod.
  • Unlike most of Keurig’s coffee pods, all alcohol pods are 100% recyclable.
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WHY NOW?

  • Changing tastes: In 15 years, beer fell from 56% to 46% of alcohol sales. Where’d that 10% go? 2% to wine, 8% to spirits.
  • Experimenting: Creative new drink options have wide appeal esp. with younger millennials eager to switch things up.
  • But still drinking: Americans are spending more on alcohol, and not because prices have risen.
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Drinkworks system, a venture between Keurig Dr. Pepper & Anheuser-Busch, goes on sale first only in St. Louis (Anheuser-Busch's HQ) next Monday - though there are plans to expand to other markets soon.

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And The Winner Is….

After a year-long search, promising a “full equal” to its current Seattle HQ, Amazon splits its second headquarters between *two* cities.

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Backstory: Amazon’s Hunt

Required: metro area with 1M population, int’l airport, mass transit, quality higher education, an educated workforce, & business-friendly environment.

Promised: a full equal to current Seattle campus, $5B construction investment & 50,000 jobs.

 

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“… much less radical move than many imagined … rich places getting richer.”

Jed Kolko, Indeed chief economist, on Amazon selecting D.C. & NYC-area home bases - the biggest financial and political hubs in America. Amazon CEO Jeff Bezos says the two cities offer the ability to attract "world class talent."
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Crystal City, VA

  • Arlington area, 3 miles west of D.C., eager for new economic energy after 24K federal jobs moved out in the early 2000s.
  • Known for its outdated, ’70-80s commercial buildings connected by underground tunnel with shops & restaurants.
  • Concerns over steep housing prices, congested roads, & pricing out of lower-income residents.
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Long Island City, NY

  • NYC neighborhood, 3 miles east of Times Square, is an old manufacturing area in Queens.
  • Even before Amazon, it is one of the fastest-developing areas with 9K+ new apartments & homes built in 8 years.
  • Struggling to handle the growth with crowded schools and infrastructure issues like sewage backups with heavy rain.
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Bigger Picture:
Why it Matters

  • 238 cities in U.S. & Canada shared taxpayer-funded research trying to woo Amazon.
  • Giving Amazon an invaluable database & insight into what types of incentives communities are willing to offer as the tech giant expands building possible data and logistics centers, etc.
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Two, winning cities will split the 50,000 jobs and $5B in investment evenly. Amazon also announced it will open a customer fulfillment center in Nashville, creating 5,000 jobs. The average salary for all 3, new locations? Over $150K, according to Amazon.

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KEEPING SCORE

The gold standard for consumer lending, used by 90% of all lenders in America, is testing a new way to calculate YOUR credit score.

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What is a Credit Score?

Widely used FICO gives consumers a “credit score” so lenders know how risky it is to loan money (i.e. credit card, car loan or mortgage).

  • Based mostly on consumers’ payment histories.
  • 300-850 range (higher # better.)
  • Couple of points make a big difference: 740 is “excellent,” 680 is “subprime.”
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New UltraFICO Score?

  • Beginning next year, FICO plans to roll out *new* scoring option.
  • Consumers can choose to share checking or savings account data.
  • Avg. account balance, savings & overdraw history may boost scores for those with bad, little credit history.
  • BUT it is possible sharing this data could *worsen* your score.
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Timing Matters

UltraFICO Score *may* open up credit lines to millions even though consumer loan (credit, car, mortgage) balances reach record highs:

“Just because somebody will lend you money doesn’t mean you should take it.”

Matt Schulz, Compare Cards.
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Something to Consider

FICO has tweaked its credit score formula several times since it began in 1989, but it takes time for lenders to adopt the new scoring system.

More than half of Americans (58%) with FICO scores have “good credit” with scores above 700 – a record high.

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About 79M Americans have subprime credit scores, another 53M don't have enough data to generate a FICO score. Big Question: Does the rating system need fixing or has it protected lenders/consumers to help prevent another credit crisis?

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FEELING LUCKY?

Lottery fever is breaking out as two of the biggest jackpots top $1.4 billion dollars combined.

(… never mind the 1 in 88 quadrillion odds)

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Why Have A Lottery?

  • In theory, a lottery raises money (to contribute in addition to taxes) for initiatives like education.
  • A multi-state lottery like Powerball distributes a portion of the sales to participating states.
  • Over the years, many have debated whether or not lottery money significantly contributes to named projects.
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Placing Your Bets?
What to Know:

  • MEGA MILLIONS: Drawing Friday at 11pm ET for $970M jackpot (2nd largest lottery prize behind $1.58B Powerball jackpot won in 2016.) Lump sum payout: $513 million.
  • POWER BALL: Drawing Saturday at 10:59pm ET for $430M jackpot. Lump sum payout: $248M.
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History on Their Side?

  • Lucky 6th Numbers:
    #22 or #9 (Mega Ball)
    #26 (Powerball)
  • State with Most Winners:
    New York (Mega Millions)
    Indiana (Powerball)
  • You pick or let the machine pick?
    Odds are the same.
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Why the Monster Jackpots

Powerball & Mega Millions both changed their rules in recent years to increase the chances of winning smaller prizes, but make it more difficult to take home the jackpot.

After the change, odds of winning Powerball lowered, from 1 in 175M to 1 in 292M, analysis found. But the odds of a billion dollar jackpot are 7.5 times more.

 

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U.S. lottery ticket sales totaled more than $80 billion annually, in the most recent data. That's more than Americans spent on movies, video games, books, music and sports tickets combined. Good luck!

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The *New* NAFTA?

An old trade deal evolves.

It will impact those who make the vehicles you drive & those who grow the food you eat.

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“It’s not NAFTA redone. It’s a brand new deal.”

Pres. Trump announcing the trade agreement between U.S. & Mexico. The new deal has a new name: United States-Mexico-Canada Agreement, or USMCA. The President says it "will send cash and jobs pouring into the United States"; other analysts say the impact on the overall economy will be very little.
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Behind The Scenes

  • America, Mexico & Canada have worked on renegotiating NAFTA for weeks.
  • While the U.S. & Mexico came to an agreement in August, a deal with Canada only came together on Sunday night.
  • Pres. Trump felt NAFTA didn’t favor the U.S. and campaigned on changing it.
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How It Impacts You:

  • Requires more auto parts & cars built in America – this doesn’t apply to ALL vehicles, but may raise sticker price as companies figure out costs.
  • Gives American farmers *slightly* more access to Canadian markets for dairy, eggs, & poultry products; good news for farmers hurting due to trade tensions with China.
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Something To Consider

“My expectation all along was that there would be few major changes and NAFTA would go from being one of the worst deals ever to the one of the best…. The bigger issue is the positive impact on confidence and sentiment.”

Jim O'Sullivan, economist at High Frequency Economics to CNBC.
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Important Reminder: Congress MUST approve all trade deals, so while the White House celebrates this achievement, it's not a "done deal" quite yet.

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BEHIND THE HEADLINE

New data shows Americans have the “highest household income ever“…

Do you truly feel richer?

What you should know about this data.

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BIG PICTURE: U.S.A.

Americans are earning more.

Fewer people in poverty (lowest number since 2006).

It’s a trend. Income increased last year for the third year in a row.

$61,371 = median household income.

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THE WAGE DEBATE

The American economy has grown, added jobs & workers… but data shows our income is NOT rising as quickly, as expected, as previous years, or compared to what things cost (inflation).

Do we look like we make more on paper, but have less $pending power?

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What’s Going on?

No one knows for sure: 2 theories

White House: Bad data & wage growth is good. Stats don’t consider tax cuts & other perks. Some (non-WH) economists agree.

Another theory: People reentering workforce may get lower paying or part-time jobs, or have fewer qualifications, so they make less $$.

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Something To Consider: The way the census measures median income has changed. Some say that makes the data difficult to compare to previous years. It's a good reminder data tells us only so much of a story. How do you feel about your wages and the economy?

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REALTY CHECK

 

Foreclosures – while still historically low – are rising in nearly half of U.S. housing markets. Is it the latest sign of a broader real estate slowdown?

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What To Know:

“The increase in foreclosure starts is not just a one-month anomaly in many local markets given that July represented the third consecutive month with a year-over-year increase in 33 metro areas, including Los Angeles, Miami, Houston, Detroit, San Diego and Austin.”

Daren Blomquist, ATTOM Data Solutions SVP, a property data firm
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Why it Matters

The Great Recession was triggered largely by the U.S. housing bubble bursting in 2007 after years of lenders giving out risky mortgages.

Our current lending environment has changed, but one property data company says “some loosening” of lending standards has put risk back into the market.

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Cause For Concern?

  • High Home Prices: Median cost of U.S. homes was up 6.2% in June vs. last year – a lower gain from the previous month.
  • Rising Mortgage Rates: 30-year fixed 4.5% vs. 4% at start of 2018.
  • Homebuilding Slows: hit a 9-month low in July and has yet to significantly rebound.
  • Fewer Foreign Buyers: Overseas purchases down a record 21%.
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Housing faces an uncertain future. A new study finds a record low percentage of millennials think buying a home is a good investment.

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