Bill’s By The Number$

Posted by: Lisa Navarro | Posted on: September 6th, 2021 | 0 Comments

THROUGH AUGUST – The S&P 500 was up +21.6% YTD (total return) through 8/31/21. The S&P 500 has gained an average of +10.9% per year (total return) over the last 50 years (i.e., 1971-2020). The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).

AN AVERAGE, NOT A FORECAST – September has been the worst performer for the S&P 500 over the last 30 years, i.e., 1991-2020, down 0.2% on average (total return). The month of August is ranked 11th of 12 months over the last 30 years but recorded a S&P 500 gain of +3.0% (total return) last month (source: BTN Research).

MOSTLY UP – If the S&P 500 is able to maintain a positive total return for all of 2021 (the index is up +22.0% YTD as of 9/03/21), it will be the index’s 17th positive annual return in the last 19 years (source: BTN Research).

IN THE YEAR 2033 – Social Security trustees announced on 8/31/21 that the trust fund backing the payment of Social Security benefits (OASI retirement benefits) would be zero in 2033. A zero “trust fund” does not mean the payment of Social Security benefits would also go to zero, but rather would drop to 76% of their originally promised levels through the year 2095. When the trustees released their report in 2010 (i.e., 11 years ago), the Social Security Trust Fund was projected to be depleted in 2040 (source: Social Security Trustees 2021 Report).

LONG-TERM ISSUE – The estimated Social Security shortfall today (i.e., a present value number) between the future taxes anticipated being collected and the future benefits expected to be paid out over the next 75 years is $19.8 trillion. The entire $19.8 trillion deficit could be eliminated by an immediate 3.36 percentage point increase in the combined Social Security payroll tax rate (from 12.40% to 15.76%) or an immediate 21% reduction in benefits that are paid out to current and future beneficiaries (source: Social Security Trustees 2021 Report).

CHEAP MONEY – The yield on the 10-year Treasury note closed at 1.303% on 8/31/21, up from 0.913% as of 12/31/20. The all-time low close for the 10-year note is 0.501% set on 3/09/20 (source: Treasury Department).

COLA – The annual Social Security “cost-of-living adjustment” has been at least +4% twice in the last 30 years, a level likely to be surpassed when the 2022 adjustment is announced in October 2021 (source: Social Security).

THEN AND NOW – The maximum Social Security benefit paid to a worker retiring at full retirement age in 2011 was $2,366 per month. That 2011 worker is now receiving $2,785 per month in 2021, an increase of +1.64% per year over the last 10 years (source: Social Security).

LENDERS WANT TO LEND – 29% of “large” US banks have loosened the lending requirements they utilize to approve loans to corporations and to individuals during the 2nd Q of 2021. “Large” banks are defined as having total domestic assets of at least $50 billion (source: Federal Reserve Opinion Survey on Bank Lending Practices).

WHERE DOES THE MONEY COME FROM? – The government’s “mid-session review” of our fiscal year 2021 finances, i.e., the 12 months ending 9/30/21, projects a fiscal year deficit of $3.115 trillion, just under our nation’s record deficit of $3.129 trillion recorded last year in fiscal year 2020. Our “deficit-as-a-percentage” of gross domestic product (GDP) is forecasted to be 13.9% in fiscal year 2021, down from 14.9% in fiscal year 2020, but still the 2 highest “percent of GDP” results recorded since 1945 (source: Office of Management and Budget).

DEBT LIMIT – The Treasury Department reset our nation’s debt ceiling limit 5 weeks ago on Sunday 8/01/21 to our government’s outstanding debt as of that date, i.e., $28.428 trillion. Since 8/01/21, the government has taken “extraordinary measures” to borrow funds without “breaching” the new debt ceiling. The government will “run out of cash” in the next 2 months unless the debt ceiling is raised again (source: Congressional Budget Office).

HALF THE COUNTRIES – 98 countries, equal to 50% of the 195 countries in the world, have agreed to accept refugees from Afghanistan (source: State Department).

MORE WILL FOLLOW – The Bahamas became the 1st nation to issue its official currency in digital form in 2020, i.e., a legally backed digital token developed by a central bank (source: Central Bank of The Bahamas).

MASSIVE LOSSES – Hurricane Katrina (2005) caused $81 billion of damages (in 2005 dollars), comparable (in nominal terms) to the estimated $80 billion of damages caused by Hurricane Ida (source: Hurricanescience.org).

SO MUCH MONEY – Professional golf’s FedExCup finished with the top 30 golfers competing last weekend in Atlanta in the Tour Championship. The tournament winner took home $15 million for the year-long competition, 8th place won $1.1 million, and the golfer who finished last (30th) still made $395,000 (source: PGA).