Catching Up with consumer confidence, GDP, job claims and the PCE. Also, China & Taiwan and Raul Porto.
So, what happened since we last chatted?
Some stuff went up, and others went down, but let’s look at the economics of the last two weeks.
Right before Memorial Day, some folks at the Fed mentioned that not only were rates NOT going to go down, but they would also actually raise rates if necessary.
And the stock market promptly dropped. Not good news.
So, what were the key numbers over the last week?
Consumer confidence was up – yay!
Every time that number comes out, it’s like the folks surveyed have persistent mood swings; at any rate, it was up this month after being down the last 3 months.
However, another survey showed 56% of respondents feel the U.S. is in a recession.
GDP for the first quarter was revised… down. Ugh.
It initially was 1.6% but was revised down to 1.3%.
Household spending – that’s what you and I do when we get our paycheck – was reduced, impacting the GDP.
The Atlanta Federal Reserve predicts that GDP will be 3.5% in the second quarter.
The Fed Beige Book revealed that businesses feel less optimistic and state that “political uncertainty” impacts their decisions about the economic future.
Initial jobless claims were 219,000, meeting expectations – whew!
Consumer spending came in lower than expected, up only 0.2%, down from 0.7% the previous month – that’s actually good news because it could indicate reduced spending, which could lead to reduced inflation. But one month does not make a trend.
The key thing for the week was the Fed’s favorite measure of inflation: the PCE – Personal Consumption Expenditure Index. It was exactly where it was the month before, meeting all expectations.
0.3% month over month.
2.7% year over year.
It didn’t go down, but more importantly, it didn’t go up.
But the stock market did.
Right now, Wall Street is happy that rates will likely not increase. Well, this month, anyway.
Taiwan and China
Or should I say, the Republic of China and the People's Republic of China?
One has a democratic government, and the other has a communist government.
I mention this because Beijing decided to “practice” surrounding the island of Taiwan last week. In the words of China’s People’s Liberation Army (“Liberation” being used the same way the cartels liberate informants), they want to “test the ability to jointly seize power, launch joint attacks and occupy key areas” of Taiwan.
So, just when you got used to your supply chain settling down, this comes up.
Is anything going to come of it? Most folks don’t think so; this has been happening for years but has ratcheted up in the last 12 months.
But some people do.
China has some economic issues that it would like to distract its citizenry from.
The most significant is a burst housing bubble.
The second is that the folks over there are still irritated by the whole covid shutdown.
The third is a high unemployment rate among college graduates.
But they have never ‘practiced’ surrounding the island before.
Just in case you get a significant number of products from Taiwan or rely on companies that do, you might want to see what other sources there are.
As an example, about 92 percent of the world’s most advanced chip manufacturing capacity is in Taiwan.
If you are not using the most advanced chips, then that percentage drops to 18.
That’s from the US International Trade Commission. You can find that in a November 2023 report.
And that’s one of the reasons for a hostile merger and acquisition, Chinese style.
It’s also part of trying to figure out what your supplier risk is. The trick with any risk is to recognize it and then mitigate it.
Because that would be a plan.
Who was Raul Porto?
He was married to Rosa, and both were born in Cuba in the early 1930s.
They petitioned the Castro government to move to the US, and Rosa promptly lost her job, and Raul was sent to a Labor camp.
Must be a charming place if people are dying to leave.
They eventually did emigrate to the United States, arriving in California in 1971. With nothing.
Using Rosa’s baking skills and Raul's work ethic, they started baking out of their home and then opened their first storefront, aptly named Porto’s, for Cuban pastries in 1976, in a 300-square-foot location, financed by a bank loan.
Ahh, the good old days of banking, when a banker could try a pastry and lend money using the taste of those pastries as collateral. But I digress…
In 1982, they expanded to Glendale, and that’s when the rest of Los Angeles got to experience their treats. I was part of that crowd when I started working in Glendale in 1998.
If you wanted to pick up a box of pastries for the office, you had better be in line by 7 a.m. Otherwise, it was quite a wait. By 8 a.m., the lines were out the door.
Good bosses showed up with a box of donuts; great bosses showed up with a box of Porto’s. And that box was empty by 10 a.m.
The Porto’s three children - Beatriz, Raul Jr., and Margarita - helped at the bakery after school and on weekends, eventually taking on leadership roles within the business they currently run.
They now have six locations throughout southern California. And a 7th opening in Downtown Disney.
Rosa passed away in 2019 at the age of 89. On May 22, Raul went on to join his partner in life and business at the age of 92.
The family issued the following statement:
“Through their hard work, humility, and dedication, they transformed a small family endeavor into a cherished community treasure. Known for his humble nature, Raul Sr. balanced his roles as a devoted husband, father, and businessman, inspiring all who knew him with his passion and commitment.”
And that, ladies and gentlemen, is the American Dream.
Yes, we are in June, and at the beginning of the year, you had a target where you were going to be by the end of the year. We are just about halfway there. Are you? Time to take stock and make adjustments to your plan.
