The Latest Economic Numbers

On Friday, Market Watch reported that the U.S. economy did better than expected during the first three months of 2019.

The article reports:

Reports of the demise of the U.S. economy proved unfounded as first-quarter activity showed surprising strength. The U.S. economy expanded at a 3.2% annual pace in the first three months of 2019, the government said Friday.

The gain was well above forecasts. Economists polled by MarketWatch had forecast a 2.3% increase in gross domestic product. The economy grew at a 2.2% rate in the final three months of 2018.

Inflation moderated a bit in the first quarter.

The article includes other good economic news:

Final sales to domestic purchasers, which excludes trade and inventory behavior, rose 2.3% in the first quarter, the smallest gain in three years, but still well above what economists were expecting.

The value of inventories increased to $128.4 billion from $96.8 billion, adding to GDP.

The trade sector added a little more than 1% to growth in the first quarter. Exports rose 3.7%, while imports dropped by the same amount, leading to a smaller trade deficit.

Offsetting these gains, consumer spending decelerated to a 1.2% gain, the slowest increase in a year.

Business fixed investment decelerated to a relatively slow 2.7% gain, down from a 5.4% gain in the prior quarter. Investment in structures fell 0.8%, the third straight decline.

Investment in new housing was another weak spot. Residential investment dropped 2.8%, the fifth straight quarterly decline.

I believe that the weakness in the housing market is being caused by a number of things. The millennials, the generation that would currently be entering the housing market, are weighed down by student debt. There is also a different attitude among young Americans about owning a house that there was a few generations ago. In the past, many Americans looked at their home as an investment–something that would grow in value over the years. Many older people began with a ‘starter house’–a small house that allowed them to enter into the housing market. Today, couples are having children later than previous generations. Their first house is paid for by two incomes, and they are not dealing with the expense of having children. The concept of a ‘starter house’ is no longer with us. Those facts, along with the price of the home most young people want to own are working to slow down the housing market. I am not convinced any of those factors are going to change.

The Millennial Generation Is Growing Up

Yesterday Investor’s Business Daily posted an article observing changes in the political affiliation of the millennial generation. Winston Churchill once said, “If you’re not a liberal at twenty you have no heart, if you’re not a conservative at forty you have no brain.” The millennial generation is illustrating the truth of that statement. The millennial generation is roughly defined as those people currently between the ages of eighteen and thirty-five. As they are aging, some of their political ideas are changing. It should also be noted that the millennial generation is 71 million strong and almost as large as the baby boomer generation.

As the millennial generation grows up, they are getting married, buying homes, and starting families. They are beginning to re-evaluate the liberal ideas they espoused in their younger years and to calculate the cost of some of these lofty visions.

The article reports:

According to the census data, the median age at which women are getting married is now 27.4, and for men it’s 29.5. Given that the age range for millennials is roughly 18 to 38, that’s right in the middle of this generation.

Marriage alone can make a big difference in terms of political views. The IBD/TIPP poll, for example, has consistently found that married women are far more conservative on most issues than single women.

The article explains the impact of the Trump economy of the millennials:

There’s another factor at play here. And that’s the upturn in the economy under President Trump.

For years, millennials suffered as President Obama’s policies of tax, spend and regulate produced the weakest economic recovery in modern times. Wages stagnated, millions of workers left the workforce entirely, and surveys showed that millennials were staying in their parents’ homes in record numbers.

Many have no doubt noticed the change in the economy since President Trump started dismantling the regulatory state and since Republicans passed the epic tax reform.

The employment-to-population ratio among 24- to 34-year-olds, for example, is finally back to its pre-recession level of 79%, after remaining stuck in the low- to mid-70% range for most of the Obama years.

The Economic Optimism Index among those age 18 to 24 is now at 59.3, according to the IBD/TIPP Poll. It has averaged 57 since Trump took office. (Anything over 50 is optimistic, under 50 is pessimistic.) Among those age 25 to 44, the optimism index is 53.5, which is higher than the overall index.

Please follow the link above to read the entire article–there is a lot of surprising information included in the article.