Bill’s By The Number$

Posted by: Lisa Navarro | Posted on: November 29th, 2021 | 0 Comments

CONTINUITY AT THE FED – President Joe Biden nominated Jerome Powell on Monday 11/22/21 for a 2nd term as chair of the Federal Reserve. Powell, on the job since 2/05/18, has overseen the nation’s central bank during the pandemic, coordinating a series of stimulus programs that kept money flowing throughout our economy. During his nearly 4-years as Fed chair, the S&P 500 has gone from 2649 to 4595, an annualized return of +16.4% (total return). 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).

MORE OF BBB – Although described as containing $1.75 trillion of proposed spending over the next 10 years (2022-2031), the “Build Back Better” (BBB) bill (HR # 5376) actually involves $2.43 trillion of spending. The largest of BBB’s social policies includes $585 billion of “family benefits,” e.g., childcare, paid family leave and universal pre-K, and $570 billion for “climate and infrastructure” programs, e.g., electric vehicle tax credits and climate-related tax credits. The Senate will debate BBB and is expected to make changes to the bill (source: BBB).

WHO BENEFITS? – The House version of HR # 5376 (aka “Build Back Better” Act) that is now in the Senate raises the “state and local tax” (SALT) cap from $10,000 to $80,000. An estimated 70% of the tax benefit of the increase to $80,000 would be used by individuals in the top 5% of US taxpayers, i.e., taxpayers with annual incomes of $365,000 or more (source: Tax Policy Center).

TAX STRATEGY – The House version of HR # 5376 (aka “Build Back Better” Act) contains a 5% surtax on income above $10 million and an 8% surtax on income above $25 million, a tax increase on individual taxpayers projected to raise $230 billion over the next 10 years. Some individuals may shift earnings that they currently receive through S-corporations to C-corporations to bring their personal income below the $10 million threshold. Please consult a tax expert for details (source: BBB).

NICE NEIGHBORHOOD – The costliest zip code in the USA is 94027 (Atherton, CA) where the median sales price of a single-family home in 2021 was $7.475 million (source: Architectural Digest).

RISING DEMAND – The USA had a housing shortage of 3.8 million homes as of 12/31/20, i.e., 3.8 million homes are needed to meet the national demand for single-family homes (source: Freddie Mac).

I.Y. – 70% of households with a net worth of at least $500,000 and headed by a person younger than 45 years old do not use or infrequently use a financial advisor for the selection of investments (source: Federal Reserve).

KEEPING OUR BANKS SAFE – As of 10/01/21, the 5 largest US banks have “capital requirements” ranging from 7.0% to 11.2% of assets. The exact percentage for any individual bank is the sum of a 4.5% minimum capital requirement, a “stress test capital buffer requirement” of at least 2.5%, and a “surcharge for global systemically important banks” (source: Federal Reserve).

NO CHOICE – 37% of 1,550 adults (at least age 18) surveyed in February 2021 are carrying “medical debt” after receiving healthcare that they did not have available funds to fully pay for (source: Statista).

TARNISHED STATE – 52% of Californians surveyed in October 2021 view the state’s economic outlook over the next 12 months to be negative, expecting “bad times” ahead (source: Public Policy Institute of California).

WOMEN – 2 of every 3 caregivers (67%) in the United States are women, caring for children, aging parents or other individuals with illnesses or disabilities (source: Center for Disease Control and Prevention).

FOR HIRE – Job openings in the USA have increased from 6.611 million as of 9/30/20 to 10.438 million as of 9/30/21, an increase of 3.827 million or 10,485 new job openings per day (source: Bureau of Labor Statistics).

MORE PLUGS – An estimated 4 million charging stations for electric vehicles will be needed nationwide by 2030, up from 45,500 existing charging stations today (source: International Council on Clean Transportation).

HUGE, BUT SLOWING DOWN – Student loan debt nationwide was $1.58 trillion as of 9/30/21, but the total has increased just +1.9% over the last 12 months. Over the last 5 years, i.e., 9/30/16 to 9/30/21, student loan debt has increased +23.5% (from $1.279 trillion to $1.58 trillion), an average increase of +4.3% per year (source: Federal Reserve Bank of New York).

A WORLD RECORD – Diane Friedman ran 100 meters in 36.71 seconds on 8/15/21 at the Michigan Senior Olympics, the fastest 100 meters ever run by a woman at least age 100 (source: GrowingBolder.com).