FOMC, Jobs, Rates, Rental Stats, Demographics again, and who was Landon Y. Jones?
9 Days and Counting…
That would be September 18, when the Federal Open Market Committee, chaired by Jerome Powell, will issue its next economic report on the economy and when Jerry will speak. And as all of my readers know, when Jerry talks, people listen.
A big part of that this time will be the interest rate statement and what the committee has decided to do regarding interest rates.
The consensus is that they will lower the Federal Funds Rate from 5.25%-5.50% down to 5%-5.25%. Or perhaps even more.
And yes, it is always defined as a spread, with no exact number given.
Why would they lower rates? Glad you asked.
The key thing is that there seems to be a handle on inflation. This is NOT to be confused with prices going down. Controlling inflation doesn’t mean prices decrease; it just means they increase at a slower pace.
The other thing is that the job market is showing itsy bitsy signs of softening. One of those signs happened this past week when i) the Labor Department revised downward the job growth for June and July by a combined 86,000 jobs, and ii) the economy only added 142,000 new jobs for August.
Keep in mind that the run rate for new job creation over the last three years was well over 200,000 per month.
So, inflation is showing signs of cooling, and so does the job market. Since the Fed doesn’t want to tank the job market, how can it stimulate it? By cutting interest rates and reducing the cost of borrowing for companies, so they can create jobs. In theory.
This is the abbreviated Reader’s Digest version, but this is kind of a Reader’s Digest Report, so there.
Investment Property Statistics according to Bankrate.com
There are 49,500,000 rental units in the USA.
Builders are on track to add 518,018 apartment units in 2024.
The ownership of these properties are:
70.2% individual investors
LLCs and LLPs at 15.4%
Real Estate Investment Trust – REIT - and real estate corporations at 1.2%
And just so renters feel better about not having the tax deduction:
The average annual cost of owning a single-family home in the U.S. is $18,118. That includes insurance, property taxes, and maintenance.
And when the garage door breaks, you just call the landlord.
I must say, that does have a certain appeal.
Demographics – again.
Aging in place – that was everywhere this week; Kiplinger, Wall Street Journal, KFI…
An extreme, yet not so extreme, example is a wife shelling out $240,000/year to provide full-time care for her husband.
On the low end, you could do it yourself, but what are the opportunity costs? You not working and generating income for you and your family.
Average Board & Care in California runs $65,000/year.
Assisted living is about $50,000 and Skilled Nursing is $120,000.
My point of this topic is not to depress you, but to make you aware of an industry that is NOT shrinking: senior care, preferably in place.
If you have a product or service that can help folks live in their homes longer, preferably unassisted, that’s the ticket.
Why? Because 11,000 people are turning 65 each day. That’s just over 4 million this year.
About 3.3 million people die each year. The senior segment is a growth industry.
As an example, in 2015, I bought an Amazon Echo for my dad and then, two years later, one for the 80-inch TV that he sat eight feet away from.
Since he was legally blind, he could ask Alexa to do things: “Alexa, what's the news?” “Alexa, show me a John Wayne movie”, “Alexa, play Beethoven”.
It saved him a lot of angst.
He could also say “Alexa, call Adam.” And it would. No more dealing with the phone. Heck, he couldn’t see the keypad anyway.
All from the comfort of his lift-assisted recliner in his apartment at the senior community where he lived, and later at the board and care.
The demographics will dictate the marketplace. Is your business adapting?
And speaking of demographics: Who was Landon Y. Jones?
He published a book in 1980 that popularized a lexicon we use almost daily.
But first, the rest of the story…
He was born in Rome, Georgia in 1943 and joked that he was a “furlough baby” because he must have been conceived while his father was on leave from the Navy.
He had mumps as a child and lost 70% of his hearing but became very adept at reading lips. At sleepovers, he would ask his friends to “turn on the lights so I can hear you.”
He graduated from Princeton, and, in 1974 joined the staff of People Magazine; he then took a leave of absence to write a book: “Great Expectations”, a look at history through a single generation as it ages.
He was viewed as an expert, giving interviews on the topic.
He ultimately became Editor-in-Chief of People Magazine, retiring from People Magazine in 2000.
He kept working, though, continuing to write, even in his hospitable bed while battling cancer.
What was the full title of his book in 1980? “Great Expectations: America and the Baby Boom Generation”.
And now you know the rest of the story.
Mr. Jones died from his cancer on August 17, at the age of 80, technically too old to be a baby boomer.
But he sure knew a lot about us.
