This Week’s Economic Update, June 17, 2024

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Here we are in Mid June, a month before even the All-Star break for Major League Baseball and there is only one competitive pennant race.  At this time, it appears that everyone is competing for wild card slots.  That is not good for attendance or interest in Baseball.  Compounding the lack of excitement in the standings, in 5 out of 6 divisions, is the issue with Diamond Sports.  MLB signed away the television rights to most of the game to Diamond/Bally Sports.  Diamond filed for bankruptcy protection in March of 2023.  A number of cable and streaming services that once partnered with Diamond have dropped them since they were not receiving payment on the games that were presented.  As the reach of Diamond has fallen, MLB, the NHL and the NBA are all extremely concerned that the audience is no longer being reached.  I will attest, if I can not watch your games, I lose interest.  The hope is that people will go to the games, however, in watching the games I have, there are a lot of empty seats in the stadiums.  Baseball has an issue that they better fix, and soon.

As we enter the final days of the second quarter of 2024, there are trends that are arising that indicate the economy is in a softening glide path.  No sign of recession yet.  First, in the start of vacation travel season, we are seeing demand for gasoline plummet.  In the past month refinery production has softened yet both gasoline and diesel inventories are growing rapidly.  This is in spite of workers returning to the office.  This seems to indicate that vacation travel is being cut back. With gas prices moderating, it is not spurring more driving

The job market is showing slight signs of softness.  The initial jobless claims going into the summer popped up a bit in the last month.  Still in the range of “nothing to really worry about now”, but still a trend that is rising.  Continuing claims are increasing, which does indicate a bit longer time for job seekers to land a replacement position. Again, it is not critical, in fact the level is about the same as the pre-pandemic period of 2014-2019.  The number of open jobs has been leaking air for some time.  We are well off the 11 million open jobs of a year ago or so.  We are roughly back to pre-pandemic levels in this category as well.

During my classes this week I heard from a number of bankers about their local markets.  In hearing their stories it is not a surprise as to why over 50% of the population believes we are in a recession.  While we are experiencing a period of dis-inflation where prices are rising at a level below prior inflation levels, the impact on personal budgets continues to linger.  Families are re-assessing spending, eating out less, foregoing purchases and seeking out more deals and discounts.  Based on what I am hearing, the experts have it all wrong.  When the inflation numbers came out on Wednesday, a group panel on Bloomberg claimed that inflation was beat and when you take out housing expenses, we are well under the 2% inflation target.  The sad reality is that housing expenses, not just the purchase price of a house, but rental rates, insurance, utilities, property taxes, interest expense and related costs have rocketed up by well over 25% in the past four years.   They are continuing to take a chunk out of everyone’s pockets.  Whenever a family’s budget is stressed by that kind of increase, it requires painful decisions as well as a sobering assessment of who is to blame.  This will impact the election much more than an interest rate change.

Have a wonderful week.

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