Save the most on beer, Why 3% growth is possible, 2018 raises coming & more

posted by Brian Mudd - 

Inside the real economy...What the 2.6% second quarter growth rate means to you:

Bottom Line: There are a couple of quick obvious takes from the 2nd quarter GDP report that we received on Friday. First, the economy has accelerated for the first half of 2017, compared to the same time in 2016. Second, 3%+ economic growth for a full year is absolutely attainable with improved policy out of Washington. There's more to the story that's specific to you but first here's the year over year economic improvement:

  • 1st quarter: 2016: .6% growth compared to 1.2% in 2017
  • 2nd quarter: 2016: 2.2% growth compared to 2.6% in 2017

So through the first half of 2016 we were pacing anemic 1.4% economic growth. Through the first half of 2017 we're pacing weak economic growth of 1.9%. So a couple of points real quickly...The average US economic growth rate of President Obama's eight years was a paltry 1.8%. So if the 1.9% growth rate held, we'd actually be marginally better off than we've been over the past eight years. More importantly, though we're seeing an expansion in economic growth through the 2nd quarter and a clear path towards 3%+ growth. here's why that matters to you... 

In my analysis, (and view) of the economy, there are three critical economic growth levels that project what we can expect economically in United States.  They are…  The 1% growth economy, the 2% growth economy and the 3+% growth economy.

  • The 1% growth economy is one which places the economy at imminent risk of recession and isn’t producing new employment or income growth
  • The 2% growth economy that is treading water.  This economy will generally only keep pace with inflation making it difficult to achieve upward mobility in employment and income growth
  • The 3%+ growth economy, which if sustained, produces a steady stream of new employment opportunities and significant opportunity for income growth

With the solid 2nd quarter GDP Report, it's clear that if we were to have meaningfully positive reforms on healthcare and/or taxes that would result in more money in your pocket - we'd have a path towards 3%+ growth. In the 2nd quarter income growth averaged 2.5% and we had a 2.6%+ growth economy. It's not complicated. Consumer spending is 70%+ of the US economy. More money coming into to you equals more of it positively impacting the economy. 

The last year we had 3%+ growth was 2005 and yet 3.1% growth is still the average US economic growth rate. It's not possible with European style socialistic economic polices and Obama like regulations but it's absolutely possible with a return to American style free market principals.  We've already seen what simply rolling back over-zealous regulations on business can do for the economy. Now if we could only get the legislative reforms needed to put more of the US economy in our hands rather than the bureaucrats in Washington...

Earnings have been nothing short of amazing so far in 2017 & it could lead to a nice raise for you in 2018:

Bottom Line: By the end of last week more than half (57%) of American companies had reported their quarterly earnings reports for the 2nd quarter earnings season. The earnings results have been nothing short of exceptional. Coming into this earnings season the estimate was for 6.2% year over year earnings growth. Not only is that outstanding on it's own. It also would have led to record quarterly profits for Americans companies over the past year. Not only have companies posted record earnings. They're blowing straight through them. As of now the S&P 500 companies have posted exceptional 9.1% year over year earnings growth!

In other words, companies have posted 47% better earnings growth than the estimates that already would have resulted in record results. This is the reason that despite the failure of healthcare reform to date, and tax reform that's uncertain, markets are able to power forward to record highs. Fundamentals continue to improve faster than stock prices. That's exciting for a number of reasons. 

First you have the the obvious...Your stock market returns. If you haven't checked your retirement accounts in awhile and you're invested in stocks, you'll almost certainly be thrilled with what you see. The second is the overall economy. Profits from corporate America lead to further investment and risk taking by American companies. While much of the growth does come overseas these days, we are seeing greater investments in the US as well. Also, record earnings are leading to record dividend payouts. That's cash in your pocket as a shareholder that acts as a positive economic catalyst as well. The third is the potential for improved wage growth. Most budgets are made in the 3rd quarter. At this time last year the uncertainty with the election led to few companies aggressively making changes for 2017. With that knowledge in hand, at a minimum, the regulatory environment has improved (which is one of the top three reasons for the record profits and stock market performance - perhaps Trump's 2nd greatest achievement to the SCOTUS confirmation) - companies can be more aggressive in taking care of their best employees going forward. 

Earnings have been so good that we already have a win-win on our hands for (investors & the economy) and we could see a win-win-win real soon.

Tracking Trump for July 31th - What the President has been up to...

Bottom Line: The Trump administration had 128 total executive actions and a Supreme Court Justice to show for his Presidency through Friday morning. Here's what's happened since:

The Trump Tweets:

  • If Republicans are going to pass great future legislation in the Senate, they must immediately go to a 51 vote majority, not senseless 60.....Even though parts of healthcare could pass at 51, some really good things need 60. So many great future bills & budgets need 60 votes....
  • We will always ENFORCE our laws, PROTECT our borders, and SUPPORT our police! #LESM
  • Departing for Long Island now. An area under siege from #MS13 gang members. We will not rest until #MS13 is eradicated. #LESM
  • I am pleased to inform you that I have just named General/Secretary John F Kelly as White House Chief of Staff. He is a Great American.....and a Great Leader. John has also done a spectacular job at Homeland Security. He has been a true star of my Administration
  • I would like to thank Reince Priebus for his service and dedication to his country. We accomplished a lot together and I am proud of him!
  • We will defend our country, protect our communities and put the safety of the AMERICAN PEOPLE FIRST! Replay: http://45.wh.gov/22R5jN 
  • Fox News: "Firm behind anti-Trump dossier also worked for Russia, Senate witness says"In other words, Russia was against Trump in the 2016 Election - and why not, I want strong military & low oil prices. Witch Hunt!
  • Republican Senate must get rid of 60 vote NOW! It is killing the R Party, allows 8 Dems to control country. 200 Bills sit in Senate. A JOKE!
  • The very outdated filibuster rule must go. Budget reconciliation is killing R's in Senate. Mitch M, go to 51 Votes NOW and WIN. IT'S TIME!
  • Republicans in the Senate will NEVER win if they don't go to a 51 vote majority NOW. They look like fools and are just wasting time.......8 Dems totally control the U.S. Senate. Many great Republican bills will never pass, like Kate's Law and complete Healthcare. Get smart!
  • If the Senate Democrats ever got the chance, they would switch to a 51 majority vote in first minute. They are laughing at R's. MAKE CHANGE!
  • After seven years of "talking" Repeal & Replace, the people of our great country are still being forced to live with imploding ObamaCare!
  • If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!
  • U.S. Stock Market up almost 20% since Election!
  • Unless the Republican Senators are total quitters, Repeal & Replace is not dead! Demand another vote before voting on any other bill!
  • I love reading about all of the "geniuses" who were so instrumental in my election success. Problem is, most don't exist. #Fake News! MAGA
  • I am very disappointed in China. Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet......they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue. China could easily solve this problem!
  • Don't give up Republican Senators, the World is watching: Repeal & Replace...and go to 51 votes (nuke option), get Cross State Lines & more.
In non-tweet related activity: 
  • Officially named John Kelly as the new White House Chief of Staff replacing Reince Priebus 
  • Issued a statement regarding the latest North Korean ICBM test "The United States condemns this test and rejects the regime’s claim that these tests—and these weapons—ensure North Korea’s security. In reality, they have the opposite effect. By threatening the world, these weapons and tests further isolate North Korea, weaken its economy, and deprive its people. The United States will take all necessary steps to ensure the security of the American homeland and protect our allies in the region."
  • Extended President Bush's 2007 executive order to aid Lebanon's national security/government as needed to maintain stability in the country
  • Addressed federal, state, and local law enforcement in New York

The day of the week you go grocery shopping matters...Monday looks pretty good - especially for beer:

Bottom Line: Grocery stores are competing for your business like never before. The advent of meal-delivery services, more people eating out or ordering delivery via the ease of app based ordering, along with major retailers like Wal-Mart, Target, Costco & now Amazon.com - is all leading to really low prices on groceries. Competition on price and product selection has been so intense that premium priced retailers, like Whole Foods, have been struggling. Whole Foods has actually had two consecutive years of same-store sales declines (and now is likely to become the grocery arm of Amazon.com in a matter of months). 

On back of all of these changes and competition, Consumer Reports is out with research on when to time grocery stores for the best prices. While there is a bit of variance based on grocer habits and ordering dates/timelines...if you were trying to time the best day of the week generally for the best prices...Monday looks like the day to shop. It's an especially good day for beer (at least to buy it). Here are a few of the findings:

  • The most discounting occurs on Mondays
  • Beer is the most heavily discounted item (average savings is 9% compared to Saturday - the most expensive day of the week to buy beer)

It makes sense. Much of what's in a grocery store has a shelf life. Many of the perishables that didn't sell from the weekend are going to need to be moved early in the week (when fewer people are typically shopping). So Monday's look great for prices and the only trade-off is that the selection of certain, especially fresh items might be a bit more limited but using the 180 theory (in this case shopping when others aren't) could allow you to save significantly - especially if you tend to purchase more perishables. 

Hysterical Media (Funny or Absurd) Headlines for July 31st:

Bottom Line: I've ID'd some in the media as generally being Godless, soulless and slanderous (the Godless/soulless thing is a theory...The slanderous part - that's pretty real). I've decided to grab some of the most outrageous headlines to illustrate the point of just how outrageous it's become. Here are today's examples. For my commentary on these headlines click the audio below. 

Excerpt: In London last week, I met a Nigerian man who succinctly expressed the reaction of much of  the world to the United States these days. “Your country has gone crazy,” he said, with a mixture of outrage and amusement.

Excerpt: The swamp is the bipartisan disaster known more formally as the federal government. The monster is President Donald Trump, whose out-sized self-caricature approach to life makes him more of a tormented DC Comics superhero (or supervillain?) than a D.C. politician. 

No one likes the Twitter bombs that Trump dumps on the unsuspecting swamp creatures every morning. They are untidy and reckless. But no one liked the real bombs dropped on Dresden, Berlin or Hiroshima either. They were anything but tidy, but they got the job done.

If you know anything about Trump, it is that he is at war, and like Gens. George Patton, Ulysses S. Grant and Douglas MacArthur, he cares less about winning a popularity contest than winning the war.

The Generals Can't Save Us From Trump   Jonathan Stevenson, New York Times 

Excerpt: President Barack Obama reasserted civilian control (over the military) when he fired General McChyrstal in 2010 and pulled the military out of Iraq in 2012. Unlike Mr. Obama who took responsibility for his military actions... 

Ohio Voters Made Trump President. They're Still With Him Philip Elliott, Time

Excerpt: During the six days that TIME spent in this region before Trump spoke, interviewing local officials and voters alike, no one voluntarily brought up the news that has consumed Washington: the Russians’ meddling in the 2016 race, the suspicion surrounding Trump’s inner circle and its conversations with Moscow, or whether the President’s tweets crossed lines. What voters from both parties said they wanted to know what Washington was going to do to make health care cheaper, jobs more plentiful and politicians less slimy. The White House isn’t wrong when its officials say Americans want to hear about jobs, the economy and health care.

The material here is amazing and wonderful in it's absurdity simultaneously. Once again, if you look at these through the prism of Donald Trump being President, and more elected Republicans serving in the United States since the 1920's...it's pretty hilarious! The air of desperation, advocacy and instructions for their "resistance" is comical. These people really do take themselves completely seriously! 

Until tomorrow...

Brian Mudd

Brian Mudd

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