US Consumers (Excerpt)

Of all the numbers that are released in the payroll report, I tend to give the most weight to the ones I use to calculate our YRI Earned Income Proxy. It is simply average hourly earnings in private industry (i.e., the hourly wage rate) multiplied by aggregate hours worked in private industry. The latter variable reflects the length of the workweek and the number of people working, i.e., payroll employment. During February, our proxy rose 0.7% to another new record high. It is highly correlated with wages and salaries in personal income (excluding government payrolls) and also with retail sales.

Consumers have other reasons besides an improving labor market to accentuate the positive. The Fed’s Flow of Funds data also showed last week that household net worth has recovered since Q1-2009 by $14.7 trillion to $66.1 trillion at the end of last year, nearly back to its previous all-time high during Q3-2007. The increase has been attributable mostly to rising stock prices, which boosted the values of households’ pension fund reserves, mutual fund shares, directly owned shares, and equity in non-corporate businesses.

Today's Morning Briefing: Bull's Anniversary. (1) Raging bull. (2) New highs despite all the headline risk. (3) Billy Joel, Fred Astaire, Ginger Rogers, and the market. (4) Record high stock prices and earnings. (5) Corporate cash assets at record despite record buybacks and dividends. (6) Fed’s doves want much lower jobless rate. (7) Wealth effect or asset bubble? (8) Payroll gains push earned incomes to new highs. (9) Consumers recoup their net worth losses. (10) Will the bull market’s leaders continue to be so? (11) “Emperor” (+). (More for subscribers.)