The U.S. Department of Agriculture (USDA) released its report, Expenditures on Children by Families, and the cost of raising a child is now up to $245,000- not including the cost of college. The most expensive part of raising children is keeping a roof over their heads and food in their bellies; combined, the two equate to 46 % of total cost.

This is indeed sticker shock, to say the least.  In 1960, the cost was $25,230 or $203,000 in today’s dollars, adjusted for inflation. However, most components have actually decreased in cost, save for the glaring explosion in the cost to educate our children which is now at 18% of the total from 2% in 1960.

Back then, public schools were good enough – nowadays, not so much. Instead of using public schools, we pay sky-high property taxes, send our children to private schools, and then hire tutors (if we can afford to do so). This speaks volumes to the mismanagement of taxpayer funds, and to the disaster that is public school.

Yes, I blame the unions and the parents.  The former offered a watered-down curriculum, while the latter said fine, because now, little Johnny is an “A” student. This must stop at some point.

Beyond Hooking Up

Many are saying that this high price tag is why debt-laden millennials are not in a rush to start families, but in some ways, it goes against the Darwinian nature of family creation. Historically, families with the least amount of money had the most children, and had a better chance of someone breaking through to greater heights in changing the dynamics of the family tree… much larger families also supplied larger pools of wage earners later in life.

When I hear young adults talk about being socially responsible and not having children, I want to say not having children is the exact opposite. Most want to have fun, and that’s fine, however we are on the cusp of becoming like Japan where adult diapers are outselling baby diapers. We need a baby boom and we need accountability, so these children are prepared for a knoweldged-based society.

Today’s Session

The world markets lifted higher during pre-market hours thanks to good news out of Germany. The German Flash Purchasing Managers’ Index (PMI) fell to 54.9 in August from 55.7 in July, significantly higher than the 50-point level that indicates continued economic expansion. The major indices indicate that they will open in the green.

So far this morning, the Bureau of Labor Statistics released the jobless claims report. Jobless claims continued to trend lower which is a good indicator for the August Employment Situation report. The amount of initial claims for the week ended August 16^th were 298,000, much lower than the upwardly revised 312,000 claims from the week prior. Continuing claims, which are behind by a week, showed that during the week ended August 9^th, fell by 49,000 to a new recovery low of 2.5 million. Also, the four-week average fell 2,000 to 2.528 million from the week prior.

The preliminary US PMI and the Bloomberg reading on consumer comfort will be released later during this morning. Below are some of the companies that reported earnings yesterday evening and this morning.

Let’s not force the issue as there should be a period of angst ahead of comments from Yellen and other Fed members. The notion that the Fed is ready to hike rates came through loud and clear, sending the market lower, but then investors bought into the close. The summation is that the Fed might be talking the right game and setting the right tone, so nobody will be surprised when they finally do. However, the fact is that there is no way rates can go higher this year without a dramatic change in the composition of new jobs and a big increase in wages.