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Tax Rates, Business Investment, Personal Saving Rates: We Report, You Decide

Contributed by Northern Trust

By Northern Trust

From 1955 through 2008, the median eight-year compound annualized growth in real business fixed investment expenditures was 4.325%. In the eight years ended 2008 the compound annualized growth in real business fixed investment expenditures was 2.1%. What were long-term capital gains and top personal marginal income tax rate doing in the eight years ended 2008?

From 1955 through 2008, the median eight-year moving average personal saving rate was 8.1%. In the eight years ending 2008, the average personal saving rate was 2.9%. What were long-term capital gains and top personal marginal income tax rates doing in the eight years ended 2008?

Case-Shiller Price Index -- Gain is Probably Temporary

The seasonally adjusted Case-Shiller Home Price Index rose 0.3% in June, after stronger gains in April (+0.6%) and May (+0.5%).  On a year-to-year basis, the seasonally unadjusted Case-Shiller Home Price Index increased 4.2% in June compared with the 4.6% jump in May.

The first-time home buyer credit program has played a role in lifting sales and prices of homes in the second quarter of 2010.  The recent gains of home prices, measured by the Case-Shiller Price Index, need to be viewed as temporary gains until we see data without support from government programs.

Consumer Confidence Gains Some, But Grim View of Job Market Persists

The Conference Board's Consumer Confidence Index moved up slightly to 53.5 in August from 51.0 in the earlier month.  The 5.0 point increase of the Expectations Index to 72.5 lifted the overall index, while the Present Situation Index edged down 1.5 points to 24.9. 

The surveys sub-indexes tracking views of the labor market present a continued grim picture of employment conditions.  The number of respondents indicating that jobs are hard to get advanced (45.7 vs. 45.1 in July), while those viewing that jobs are plentiful edged down (3.8 vs. 4.4 in July) during August.  The net of the two indexes has a strong positive correlation with the unemployment rate.  In August, the net of the two indexes rose to 41.9 from 40.7 in July suggesting a higher unemployment in August.  The August employment report is scheduled for publication on September 3.

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