The problem with the current economic recovery isn’t quantity. It’s quality: “Lower-wage industries accounted for 22 percent of job losses during the recession, but 44 percent of employment growth over the past four years…Higher-wage industries accounted for 41 percent of job losses, but 30 percent of recent employment growth.’ Lower-paid industries like food services, restaurants, temp help, and retail trade accounted for 39 percent of job gains over the last four years.” Meanwhile, “at a time when the still sluggish economy has sent a flood of jobless young adults back home, older people are quietly moving in with their parents at twice the rate of their younger counterparts. For seven years through 2012, the number of Californians aged 50 to 64 who live in their parents’ homes swelled 67.6%…Among 18-to 29-year-olds, 1.6 million Californians have taken up residence in their childhood bedrooms…that’s a 33% jump from 2006, the pace is half of the 50 to 64 age group.” Furthermore, a recent Gallup survey indicates the average age of retirement is 62 and has been steadily increasing since 2010. Also, “according to a recent Gallup survey of 5.4 million working adults, 52% say they are not engaged in their work…Another 18% describe themselves as ‘actively disengaged’ — disgruntled and spreading bitterness among co-workers. With the exception of recession periods, the majority of employees start each new year vowing to look for a new job.” Meanwhile, “in recent years, internships remain as prevalent as ever — but their ability to confer a real career has faded along with the economy.” Furthermore, “Millennials would rather take an internship with the hopes of scaling the ladder at an existing business rather than risk being shut out of their desired field or venturing out on their own,” and “many of the Millennials taking internship after internship can only do so thanks to their parents’ resources.” Finally, here is a look at the Next America: “Demographic transformations are dramas in slow motion. America is in the midst of two right now. Our population is becoming majority non-white at the same time a record share is going gray.” (Do yourself a favor and click on the link. The website is beautiful and their research is extremely coherent.)
Fama And French And The Shift Back Into Value, Profitability And Investment
“Fama and French are famous for their three-factor model, which uses market, value, and size characteristics to explain stock returns…After more than 20 years, Fama and French have embraced the notion that size and value may not be the best factors to explain stock returns. Their new paper, the first draft of which was released in June 2013, finds that two additional factors — profitability and investment — make redundant the value factor. In other words, value stocks — defined as those with low price/book — only beat growth stocks because they historically tended to be more profitable and less voracious users of capital.” Meanwhile, JC Parets believes“we are now witnessing the shift back into Value and out of Growth.” Also, the selloff in tech stocks continues, and that’s a good thing: “hot money is becoming downright respectable (or at least is trying to). Markets are going through a rebalancing, with money leaving the high-flying stocks with stretched valuations and finding a home in shares of companies with higher dividends and more reasonable price-earnings ratios. This is something to embrace, not reject.”
“Until 2008, there was one national loan limit for the entire U.S. But when the housing crisis erupted and private lending retreated for larger ‘jumbo’ mortgages, which exceed the conforming limits, Congress raised the limits in certain counties where homes were more expensive…The logic of loan limits is to prevent two quasi-government agencies (Fannie and Freddie) from subsidizing the purchase of luxury homes. But in some areas of the country, there’s nothing cheap to buy.” For example, in San Francisco, “a majority of homes — 61% — is above the local loan limit of $625,500,” which is already “50% higher than the $417,000 maximum in most of the rest of the country.” Meanwhile, here’s a really fun depiction of urban development through Google street view.
“Unless it begins to spend more, the US risks squandering the global lead it gained in the 1950s and 1960s, when it invested in big projects such as the Eisenhower Interstate Highway System.” Here’s the problem: States receive funding for vital transportation and infrastructure projects through the Federal Highway Trust Fund. The Highway Trust fund relies on a gasoline tax for revenue. “No politician has dared raise the federal gas tax since 1993. That decision has conspired with declining fuel sales to bring the Highway Trust Fund close to exhaustion. The US transportation department estimates the fund could run out as soon as August.”
“Toyota delivered a surprise pink slip to California on Monday, announcing the company would move its U.S. headquarters and about 3,000 jobs from the Los Angeles suburbs to the outskirts of Dallas.”