Lipstick Recession and Wind Turbine Woes: Unpacking Economic Trends - The Cents of Things

Welcome to the Cents of things podcast, where your money talks and we listen, join host Jeff Kikel and Ron Lang as they explore the economy, financial planning, and the stock market, adding a splash of fun to make your financial journey engaging. Each episode, they break down complex topics to give you the clear edge in your financial decisions. Stay tuned and let's make Cents of things together.

/Good morning. Welcome to the Cents of things with Jeff and Ron. We are here to walk through some good stuff today. We're going to have some fun things to talk about, and we're going to go through the top 10 economic indicators that you as investors should follow. Good morning, Mr. Ron. Good morning,

Mr. Jeff. You know what? It's funny. You ask six economists what's going to happen six months from now. You get six different answers and you ask them what their models are. There's hundreds of these economic indicators, but it's amazing how financial media kind of hones in on four.

Exactly. So we're going to hone in on 10. Honestly, these are ones that we almost always follow on our show. We report on as they come out. So I think, this is the stuff I consider important. It's the things I look at and if you look at Places like briefing. com These are the ones that have the highest impact on the market they're not ones that people look at and go when it comes to that. Okay let's let's kick this puppy off. Let me share my screen with everybody and We're gonna start off with some did you knows? That I had actually put together about a week or so ago. And we just weren't able to spend time on them. Can you see that on your screen there? I can. All right. I had a guinea pig when I was younger. Did you know that Switzerland prohibits the ownership of just one guinea pig? So there are no lonely guinea pigs. I'm wondering if it's a religious thing. I don't know, or it's just, hey, it's the guinea pig lobby, the pet shop lobby of trying to force you to, have 100 percent more guinea pigs.

Okie dokie.

Human teeth are the only part of the body that cannot heal itself. I did know that. Dentists will always have a job no matter what and AI will not take their job away

no, and that's why implants are so popular because once you lose your enamel you're done and

You get it back with the implants. We are more creative in the shower there's a lot of ways I could take that one. I know now, I am able to sing as well as Billy Joel in the shower. Which is good now from a writing standpoint, I will say I'm a little less creative when I drag my laptop into the shower with me.

I gotcha. I will tell you I'm tone deaf. You don't want to hear me sing in the shower.

As long

as

you're by yourself,

excuse me, you don't want to hear me sing

at all, let alone

a

shower. Okay, now this is funny. I got this from a website called we are teachers and I'm like you aren't very good spellers, but fruit loops are actually all the same flavor. Despite. The the color of that,

you know what? I thought I knew that I used to like Fruit Loops when I was younger. I was always a Frosted Flakes guy, but we sprinkled in some Fruit Loops and sugar smacks every now and then

I

hated Captain Crunch. I didn't do Raisin Bran. I didn't do any of those. What were your favorites?

I was a Captain Crunch guy when I was really young. And then I shifted to shifted to Raisin Bran of all things. But the only problem with brazen brand is you just got to shovel it down really fast because otherwise it gets all mushy and disgusting. Hey, I'm

not afraid to say I got a box of frosted flakes in my pantry right now. Hey, you know what? You never go away. Come on. I am a Leo, so I am king of the jungle, Tony, the tiger isn't so bad either.

Competitive arts. We're coming up to the Olympics. Competitive art was once an Olympic sport. So I put that in

with how competitive art is. Yeah. Rhythmic gymnastics. All right. First person to draw me a stick figure and Jeff wins. Yeah. So was it a timing thing or how to be judgmental? I

really don't know. I'm going to have to look that one up. Yeah. It's interesting to me. And I don't know when it left the Olympics. I'm assuming this was one of the early on things or whatever, but. All right. Let's get to the top 10 economic indicators that investors should call

this is number

10

and

these aren't any specific order except for the last one, I put the last one because I think right now I don't particularly rate it as the top thing, but I think right now it should be, or it is on everybody's mind. Number 10 on our list, GDP. So gross domestic product. This provides the overall value of goods and services that the economy produces and it indicates whether we're slower or we're slowing or growing at that point. It tells us that this. Is a component of leading economic indicators as well, which is interesting because it's a lagging indicator. Of course it is, but it's measured in leading economic indicators, which, yeah, once again, I've never understood it because it's always looking back up to always revising. Yeah. Employment figures, this hasn't been a major issue for a few years, but I think it's going to become more important as we get farther and farther into what we're seeing, the cracks that are showing up there. This is monthly, it comes out, usually it's about the, what, second week ish. That we get this now. First Friday of every month. Okay. First Friday of every month.

And it depends because if the first Friday is the first or second, then sometimes it goes the next Friday. I forgot what the provision was for that.

It's definitely the most important thing because that's what's really holding up the economy right now. If you look at a lot of the economic numbers, they're actually somewhat poor or declining and the employment figures have been strong although weakening a little bit, we're back up to above 4 percent at this point. So it's starting to that starting to become a factor. Industrial production. So this is how much production as a measure of output of manufacturing industries. So this including this includes producing goods for consumers and for businesses is the monthly release from the Fed. And, it reports on capacity utilization in the factory sector. So extremely important because this can also be an indicator of what the job situation is going to be. I think that's the PMI too. Yeah, absolutely. So it's an important figure. And a lot of times it leads in there a little bit. All right. Next one in line, consumer spending. So this accounts for two thirds of the U. S. Gross domestic product, and it's a good gauge of whether the consumer is spending. It's monthly, and it lays out personal income. It provides data on consumer spending. It also provides inflation through the consumer through a price index. Once again, another thing that it's one of those things where you start to see All right, if there's unhealthiness in The, industrial sector people are getting uncomfortable with either the economy or their job situation. You can see that pullback in consumer spending. All right, next one in line, home sales. Now, why is this a big thing? It's a big thing because the home sector drives a lot of the other sectors. The home sector can drive, there's more home sales. That means the home depots in the lows of the world can increase. It means that, durable goods like refrigerators and all the other appliances in your kitchen are all going to potentially go up because people are shifting to new homes. They may be updating either in an existing home or in a new home. Of course, that's. more of a wholesale product. What's your thoughts there?

Look in my lifetime, home sales and home pricing has only drastic, the drastically affected the economy in the markets twice. Once in the late eighties, early nineties, and obviously 15 years ago. Right now, they're, I think that this is just a bunch of propaganda from the real estate people saying, oh yeah, interest rates are cut. They don't know if interest rates are coming down because obviously the high mortgage rate is, is impeding, people from From buying a house. I know in my neighborhood, there's still five or six houses up for sale. House across the street has been on and off the market for a year. Yeah, people will look at this as a way of our people spending. And look, new home sales. We, we talked about this before has been, unbelievable, right? Because there's not enough inventory of used houses or existing homes, right? Not used, but existing homes. So people are buying new. Yeah, I think it's an important factor. But, in our lifetime, only twice has a drastically affected. Yeah, we're

drastically went down. I think it's likely that prices will pull back at some point. But for right now, With rates where they're at. Somebody that's like me, that's sitting on a 3 percent mortgage or 2. 75 percent mortgage, I'm not going anywhere. Why would I, at this point, I'm happy with my house. And then until I decide to move to a different state, I'm most likely not going to sell my house, even though it's bigger than I need. Yeah, I'm just not going to sell it. I was just

about to say unless you were going to downsize

and then you wouldn't have a mortgage probably because you're going to buy a lesser valued home. And that's likely what's going to happen for us anyhow, because we, I don't need a big house and it's just two of us. We're, we've got probably about 1500 square feet too much for us right now as it is. That's really what we're looking at in the future. But until things pull back, I'm not going anywhere. I thought

you use that 1, 500 square feet of space for your podcast studio.

I do use it for a podcast studio and now I've moved another room in the house into a video studio. So I

mean,

I've got the space and I'm not using it for other purposes. So my office became a video studio. And why not? All right, home building. So this is related. This is more on the new side and it's an indicator of, okay, how, especially with the builders, how much risk are they willing to take by throwing more houses out on the market? I think at this point they can pretty much put as much as they want out on the market and they're going to pretty well sell it. There was a little bit of a slowdown. I know from talking to my realtor buddies, there was a little bit of a slowdown early on in that That first part of the interest rate raise. And then now homebuilders are back to building they're just not building at the pace that they were before and it's summertime. Yeah. But really for this year, they've really not been building at that pace. Construction spending. Also in these are all interrelated, but how much is construction spending going on? And this is all the different stuff related to it, such as labor, materials, engineering work, all of that falls in here and it's residential and non residential public and private construction. So it's a view of all of this together. All right. Manufacturing demand. So related to the industrial production, manufacturing demand, this is the report on how much the manufacturers are shipping their inventories and orders as a demand for manufactured items. So this is a monthly report, but. There's a more lengthy follow up usually the following month that kind of gives it an update and there may be some adjustment in there.

Yeah. All these things are interrelated. It's just a matter of, the inner, it's, you see the headline number. I lost your sound. These things have given you different ways on how the sausage is made, but it's all tell it's all telling you a story.

Yeah, it is. And I think the most important thing that I would tell from this. Is there is just no one or two of these, or, as the news media gets where it's one or two, and then they focus on those nonstop. It's you get a picture of the tapestry. When you look at all of these together, I

mean, earlier you had consumer spending. Retail sales is a separate number, but that's part of our consumer spending.

Yeah. And it, but it's all related to that retail and food service. So it's a little bit more of a. Deep dive into specifically the retail environment. If I remember correctly, I don't I can't remember if or not that this includes like online sales and stuff like that. I think it's all I believe it does. Yeah,

they changed that about 10 or 15 years ago where they included retail sales. Obviously it's as long as those companies are reporting, which I'm sure is a little bit tougher, Amazon and Walmart, I'm sure it's pretty easy for them to report.

Yeah, exactly. Cause it's just, total sales for that. They're the

two

biggest out there. Yep. All right. The last one is inflation. And I think this is the one that both the media is focused on. I think it's a, an election issue right now, or, tonight you've got the presidential debates. I'm sure this is going to be one of the top two or three topics that are in there. And inflation comes in via the consumer price index, the producer price index. And the one that, you know, really, I never paid attention to much, but the Fed has really narrowed in on that they use as a major factor is the PCI. So the personal consumption expenditures which I think is funny because I think PCE, they pretty much, they, once again, just CPI, they remove food and energy because they say it's so volatile that they can't track, can't track it. I'm like I think that's probably two of my largest expenditures that I have is food and energy, but just say it.

Yeah. And you know what? I never understood this and this is a separate conversation, but. Going back to, when we were kids and inflation was skyrocketing and it's fluctuated up and down, they said no. You, you need at least two or 3 percent inflation every single year. Like why can't prices just stay the same? That's because public companies, they got to do better than last quarter. They've got to, increase prices. People want raises, you got to do improvements and upgrades to facilities and manufacturing. So price has got to go up every single year. I always talked about, you ever see Oreo cookies, they've gotten smaller. Yeah. Bazooka bubble gum used to be this nice big piece, then smaller, then they put ridges in it. So it was the same size, but it was less bubble gum. Of course, I only hone in on the important things but the idea is that, why can't prices go down? Oh, stagflation is bad. Deflation is bad. Why? If people aren't going to get raises every single year, or every other year, then why do prices need to continue through education or, being more educated or whatever, why can't prices stay the same?

Yeah. Or why can't they go down at times with it being, with it not being a bad thing? Overall,

Do you see the price of a car? Forget, oh, I know you used cars. New cars are insane. I don't understand. Look, you gotta replace your car every now and there's, at some point you replace all the parts. You bought another car. Yeah. But who combustible? What's the average cost of a car? 50 to 60 K.

And the, the other part of it is, okay, so it's 50 or 60 K the first year you buy that thing, it's going to drop off about 20 to 25 percent of the value.

Easy.

Yeah. I haven't bought a new car and I don't even remember the last new, I'd probably 2007. Yeah, the last new car I bought, because I buy them typically three or four years old. They last forever and, they're built to last and took the premium out. All that premium has gone at that point. And I just have the car and I'm fine with it. I, I just don't understand it. And, I think the interesting part is the move towards electric vehicles. I'm like, Yeah, but they're like insanely expensive on top of that.

Yeah, but I think you got to look at the cost of the savings in gas and you don't need to worry about the, the fluctuation in gas. I've had several people that love their EVs and they swear by them. And many of them have said the cars already pay for itself within five years.

I'm

sure. I

mean, honestly, I'm sure it has. The maintenance is nothing. On them. You don't have to do much in the way of maintenance. They don't really wear out ever besides the batteries, eventually I

mean, normal maintenance.

Yeah. Yeah. Just barely normal maintenance, but you're not having to change oil and all that. So I think from that perspective, yes, but I just did a 10 hour or 10 and a half hour trip back and forth to New Mexico. I could not have done that in a electric vehicle. No, you still stop for gas though. I stopped for gas for five minutes. And the problem was there were points in time where it was like, okay, we've got a plan. This is rural Texas and rural New Mexico that we were going to, we were barely finding gas stations and I did not find or see. One single electric vehicle charger in that entire 10 and a half hour trip.

You know what? They're there. You didn't know where they were. You'd be surprised where they are on the map, but an EV can go up to 300 miles. And actually they're working on ones that are now 400. So if you're going to stop for gas every 300 something miles in EV, you stop, every 275 to 300, but you know what? They got the fast charging stations. Now it's not going to take five minutes, but it'll be less than 10 or 15.

No, they won't not

faster. The fast charging ones now are pretty quick now. Yeah. Oh, you're not sitting there for two hours. No.

That's not happening. I'm not sitting there for 10 minutes. I stop in, get gas and I'm going, buddy. I'm stopping to go to the restroom. I'm filling the truck up,

but it could save you three or 4, 000 a year. Would you wait an extra five, 10 minutes? Absolutely not. Absolutely not. All right. Those are good 10. Let's go back. Those are good 10 economic indicators. You hit all the core ones. There are others. We've covered some of the other ones, but those are the 10 core ones. It's the ones

that you should watch. It's the ones that you should keep your eyes on and it helps you to weave that tapestry of what you're looking at from where the economy is going. Luckily, if you don't want to do that, just continue to watch the show, because we share these with you as they come out almost every week. There's some, one of these economic indicators will be on that list. Hold on real

quick. And as a segue and a tease, I have the ultimate economic indicator in the next podcast. What? Okay. Then you've got to watch the next one. I wasn't going to share it now, but it's a good one.

All right. I

love it. It's not the underwear. It's not the underwear index.

Yeah. Oh man, come on. You haven't done that. We already covered that one

before.

All right, folks. That's why we do these shows for you. Make sure that you subscribe to the channel. Make sure you give us an upvote. Let us know that we're doing a good job here. We really appreciate it. We've had a huge influx of folks watching the show now. So we're really excited to have you new folks on. And we'll continue to do shows like this to help you understand what you need to know. So we'll see you back here the very next time.