For most of you the name Corporal Randolph Agarn will not trigger any memories and will be unknown in any context. For me, the name brings back thoughts of laughter from a more innocent age. He was often the epitome of incompetence with the goofiest of ideas and solutions offered on the short lived but often re-run comedy series, F-Troop. Some of the funniest story lines revolved around his hypochondria, always assuming he had a disease or other ailment that he had overheard in conversation. In one case he thought he had a sickness that only his horse could have. I mention Cpl Agarn because the actor who played that role passed away last week at 99. Larry Storch was a talented comedian that led to many roles in many sitcoms in the sixties and early seventies. His work included the voice over for Professor Whoopee on Tennessee Tuxedo. For me at least, whatever show he was on he always brought a smile and a giggle from me with his brand of goofy humor. That a guy who played a hypochondriac so well, would make it to 99, makes me smile just thinking about it. Rest in Peace Larry, Thanks for the laughs.
The automotive industry is indicative of what is going on in our economy overall. The average new car price purchased is now at $48,000. The average new car payment is hovering at $700 per month. Both are up over 13% in the past year. This is an unheard-of number that admittedly many can not afford. Yet, the supply of luxury and higher end vehicles continues to be short with many being sold before they hit the lots. The push upwards in price and payment is related to the strong increase in sales of high end vehicles. At the same time, compact and low-end cars and trucks are being passed over. What appears to be occurring throughout our economy is that upper income earners are continuing to spend to keep the economy somewhat afloat. The lower end, those who are out of work or have lower incomes are being pinched to a point where they cannot afford to provide much beyond putting gas in the tank and food on the table. The inventory numbers across the economy are showing items piling up on the low end of the price scale and shortages on the high end. While the supply chain is part of the issue, it is also apparent that demand for luxury items continues to be strong. The key question is for how long.
Consumer retail sales for June were up 1%. Even if you pull out autos, the sales level was up 1% indicating no decline in auto sales month over month. When you pull out gas, sales were up only .7% so driving demand is ebbing in spite of being the peak of the vacation driving season. Again, it appears to be the upper end of the spectrum that is driving the increase. To be clear, a 1% increase in retail sales in June is not enough to avoid pushing the economy into a negative GDP level for the second quarter.
There are a number of areas where demand is abating. Some commodity prices are dropping. This past week copper prices tanked. Possibly a reflection that housing has peaked. Existing housing listings are staying on the market longer and are taking less than the listing price in a number of cities. As shared above, gasoline stocks increased by 5.825 thousand barrels in the last week. This was at the same time that gasoline production dropped by 1.425 thousand barrels. It appears that consumers are driving less as well as using less gas. This all relates to the inflation level impacting at least the lower half of the population.
Industrial production in June declined .2%. Manufacturing capacity in the US also declined slightly from 80.3% to 80%. This is another bit of evidence that the second quarter was not good. I still expect the second quarter to reflect a negative growth in GDP leaving the US in a very slight recession.
Have a great week.