Economy – Additions & Updates

Additions – spending, factory orders

Updates – jobs, housing, sentiment, GDP 

Asset Allocation – Additions & Updates

Additions – none

Updates – none

Economic Summary:

Jobs – payrolls: small increase, layoffs: large increase

Housing – vacancy rates: low (yet not historically lows)  

Sentiment – falling

Spending – falling 

Factory Orders – falling / recessionary

Q3 GDPNow Forecast – 1.0%

Payrolls

July nonfarm payrolls came in at 215K, modestly below the expected 225K and down from the upward revised June print of 231K, and down from the 260K in May, with the unemployment rate flat at 5.3%, in line with expectations.

Challenger Gray reported that in July there was a whopping 105,696, up 136% from the 44,842 job cuts in June, and the highest in nearly four years, or since September 2011, the last time there were more than 100,000 layoffs.

Worse, the July surge brings the year-to-date job cut total to 393,368, which is 34 percent higher than the 292,921 cuts announced in the first seven months of 2014. This represents the highest seven-month total since 2009,when 978,048 job cuts were announced amid the worst recession since the Great Depression. More than half of the July job cuts were the result of massive troop and civilian workforce reductions announced by the United States Army. The cutbacks will eliminate 57,000 from government payrolls over the next two years.

Despite employment improvements, Millennials are doing anything but moving out. Below is a chart showing that the share of young people (18-34) living with parents has held steady over the last half year.

Housing

Rental demand is reflected by vacancy rates; low vacancy rates reflect high demand. Vacancy rates are low, but not at historic lows except in certain high-demand urban zones such as San Francisco.