- NEED MORE TIME - A 30-year old individual investing $523 at the beginning of every month in a pre-tax account earning +8% annually would accumulate $1 million by age 60 assuming the monthly investment is increased +3% per year. A 30-year old individual investing $523 at the beginning of every month in a pre-tax account earning +6% annually would accumulate $1 million by age 64 and 4 months assuming the monthly investment is increased +3% per year.
- EACH DAY - Outlays by the US government during fiscal year 2008 were $2.98 trillion, i.e., $8.2 billion a day. Outlays by the US government during fiscal year 2018 were $4.11 trillion, i.e., $11.3 billion a day (source: Office of Management and Budget).
- NEW JOBS - 92% of the 820,000 new jobs created in the United States YTD through 4/30/19 are in the private sector, i.e., non-government jobs (source: Department of Labor).
- ON THE EDGE - 31% of 1,010 working adults surveyed in February 2019 say they would not be able to pay for daily necessities without utilizing credit card debt or accessing their retirement savings if they were to miss just a single paycheck. 51% of those surveyed say they would have to use a credit card or dip into savings if they were to miss more than 1 paycheck (source: National Opinion Research Center).
- FEWER FUTURE TAXPAYERS - The greatest number of births in US history (32 million) occurred in calendar year 2007, equal to 8 babies born per minute for the entire year. The 3.79 million births that occurred in 2018, the lowest American total since 1986, is equal to 7 babies born per minute (source: Center for Disease Control).
- EXPENSIVE EDUCATION - Outstanding student loan debt in the USA was $1.49 trillion as of 3/31/19, up +126% (equal to +8.5% per year) from $660 billion of student debt as of 3/31/09 (source: Federal Reserve Bank of NY).
- IMPACTED BY TARIFFS - 41% of the apparel and 72% of the footwear produced worldwide is manufactured in China (source: American Apparel & Footwear Association).
- WHO PAYS? - When the United States imposes a 25% tariff on an imported good from China, e.g., a television or a laptop, the tariff is paid to the US Customs and Border Protection Service by an American-based broker who represents the US retailer (the “importer of record”) who is buying the Chinese good, i.e., the Chinese government does not pay the tariff (source: US Customs).
- THAT HURTS - China’s economy is projected to suffer a 5 percentage point reduction if the US implements a 25% tariff on all imports from China, i.e., 6.6% (China’s 2018 actual growth) falling to 5.1% (source: Bloomberg).
- IT’S WHY THEY ARE EXPENSIVE - 88% of the drugs that enter clinical trials do not receive FDA approval and never come to market for sale to the general public (source: Tufts Center for the Study of Drug Development).
- KICK THE CAN - The 5 pension plans for state employees in Illinois were 40% “funded” as of 6/30/18, i.e., the end of fiscal year (FY) 2018. Illinois state law requires the plans to be 90% “funded” as of the end of FY 2045. Illinois Governor J.B. Pritzker has recommended the 90% funding requirement be delayed to FY 2052.
- HIGH-PRICED HOME - Hedge fund billionaire Ken Griffin paid $238 million for a New York City penthouse in January 2019, the most expensive residential purchase in US history (source: New York Times).
Have a great week!
Michael J. Levine, CLU, ChFC