Current Events in February 2019

The consumer appears to be doing well if earnings from online retailer Amazon are any indication. The company reported fourth quarter earnings of $3 billion, or $6.04 a share, on revenue of $72.4 billion.

That’s up from a profit of $3.75 a share on sales of $60.5 billion in the holiday shopping season of 2017, and better than analysts expected.

An Amazon earnings beat suggests consumers remained confident throughout the fourth quarter of 2018, spending heavily during the holiday season. Since Amazon is one of the nation’s major retailers its strong sales suggest consumers were spending freely during the last three months of the year.

Amazon said its net sales increased 20 percent to $72.4 billion in the fourth quarter, compared with $60.5 billion in fourth quarter 2017. Excluding the $801 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 21 percent compared with fourth quarter 2017.

The company reported an increase in operating income of $3.8 billion in the fourth quarter, compared with operating income of $2.1 billion in fourth quarter 2017.

Favorable economic position

While that’s pretty good news for Amazon shareholders, it is also another indicator that consumers remain in a pretty favorable economic position, even as corporations temper their outlook for 2019. Consumers are still spending and they’re spending a sizable portion of their disposable income with Amazon.

“Alexa was very busy during her holiday season,” said Amazon CEO Jeff Bezos. “Echo Dot was the best-selling item across all products on Amazon globally, and customers purchased millions more devices from the Echo family compared to last year.”

Amazon points out its profits rose despite the fact that it implemented an across-the-board minimum wage of $15 an hour during the quarter. The company says the new Amazon minimum wage benefited more than 250,000 employees in the U.S. and 17,000 employees in the U.K., as well as over 200,000 seasonal employees who were hired during the holiday period.

Using Amazon as a consumer barometer, the first half of 2019 might not live up to the last quarter of 2018. In a conference call following its earnings release, Amazon executives lowered their sales expectations for the current quarter.

January was another good month if you were looking for a job, as employers increased their payrolls by 304,000 positions, according to the monthly report from the Labor Department.

At the same time, the government revised December’s very strong hiring report sharply downward, from 312,000 jobs to 222,000. The unemployment rate edged up to 4 percent, mainly for technical reasons.

Unemployed people who reported they were temporarily laid off rose by 175,000, largely due to furloughed federal workers who were idled by the government shutdown for most of January.

“Our evaluation of the establishment survey data indicates that there were no discernible impacts of the partial federal government shutdown on the January estimates of employment, hours, or earnings,” said William Wiatrowski, acting commissioner of the Bureau of Labor Statistics.”

Wiatrowski said the economy has produced an average of 240,000 new jobs over the last three months, even with December’s downward revision in new jobs.

Big increase in part-time workers

While the numbers suggest a still-strong job market, there was one troublesome statistic. There was a significant increase -- 500,000 -- in the number of people who are working part-time but are seeking full-time employment.

The leisure and hospitality industry did the most hiring in January, increasing the number of jobs by 74,000. Most of the hiring came at restaurants and bars. The health care industry added 42,000 jobs during the month. The biggest job gains occurred in ambulatory health services and hospitals.

The construction industry also ramped up to start the new year, adding 52,000 jobs. Specialty trade contractors were especially busy during the month, hiring for both commercial and residential projects.

Wages continued to slowly grow last month. Average hourly earnings for all non-farm employees rose three cents to $27.56 after rising 10 cents in December. Over the last 12 months, the Labor Department says workers have seen their pay rise an average of 85 cents an hour, a rate of 3.2 percent.

Maybe it’s all those motorists in the Midwest and Northeast driving south to escape the polar vortex, but something has caused a huge spike in gasoline demand.

The increase in demand to summer levels will likely lead to higher gas prices by next week, but this week prices have actually fallen. The AAA Fuel Gauge Survey shows the national average price of regular gasoline is $2.26 a gallon, down one cent from last Friday.

The average price of premium is $2.84 a gallon, a penny less than last week. The average price of diesel fuel is $2.92 a gallon, the same as the last two Fridays. But the price stability might not last.

The U.S. Energy Information Administration (EIA) reports consumers increased their demand for gasoline last week to 9.6 barrels a day. Consumers are using 700,000 barrels a day more than the previous week, putting demand at what AAA calls normal for an average week at the height of summer.

“One reason for the jump could be the weather caused motorists to fill-up and stock-pile ahead of the storms,” AAA said in its latest market update. “Despite the increase in demand, high levels of gasoline stocks may keep average pump prices in check.”

Gasoline prices normally rise in late winter as refineries curtail operations for annual maintenance and begin the switch-over to summer grade fuel. Patrick DeHaan, GasBuddy’s head of petroleum analysis, reports on Twitter that several refineries slowed operations this week because of extreme cold.

The states with the most expensive regular gas

These states currently have the highest prices for regular gas, according to the AAA Fuel Gauge Survey:

• Hawaii ($3.26)

• California ($3.22)

• Washington ($2.90)

• Alaska ($2.88)

• Nevada ($2.86)

• Oregon ($2.78)

• Arizona ($2.49)

• Connecticut ($2.49)

• New York ($2.49)

• Pennsylvania ($2.47)

The states with the cheapest regular gas

The survey found these states currently have the lowest prices for regular gas:

• Missouri ($1.90)

• Oklahoma ($1.93)

• Mississippi ($1.96)

• Kansas ($1.96)

• Texas ($1.97)

• Alabama ($1.98)

• South Carolina ($1.99)

• Louisiana ($2.01)

• Tennessee ($2.04)

• Virginia ($2.06)