The Homa Files

Earlier this week, we looked at one of the no-BS economic measures: household income.

Adjusted for inflation, median household income dropped 8% during the recession … and has been flat after bottoming out a couple of years ago.

That means that the median real household income is still down 8% from the pre-recession peak.

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The drop in median household income has come despite a steady increase in average hourly wages … they’re up about 10% since the official end of the recession.

See Let’s celebrate the economy … err, let’s wait. for details

Here’s another no-BS indicator sent along by a loyal reader …

According to research from Birinyi Associates (quoted in Sound Investing):

“Corporations bought back $338.3 billion of stock in the first half of the year, the most for any six-month period since 2007.”

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Sound Investor argues that the buy-back binge raises some concerns that companies are weakening their competitive positions, the quality of their earnings and their balance sheets to satisfy activist investors clamoring for even higher short-term gains.

That may be true, but I think a glossed-over observation in the Sound Investor analysis comes closer to hitting the nail on the head:

“Larger buybacks are generally authorized if a company is carrying more cash than can be put to productive use.”

Hmmm.

Households with flat income  at depressed levels … and corporations with cash that can’t be put to productive use.

Let’s hold the celebration …

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Thanks to ST for feeding the lead.
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This entry was posted on October 8, 2014 at 6:59 am and is filed under Economic indicators, Economic Recovery, Economics, Stock Market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.