Bill’s By The Number$

Posted by: Lisa Navarro | Posted on: June 27th, 2022 | 0 Comments

STILL MADE SOME MONEY – The S&P 500 has suffered 2 “bear” markets since the beginning of the pandemic, i.e., in just the last 30 months. However the S&P 500 has gained +20.4% (total return) from the close of trading on 2/19/2020 (at the peak for stocks before the first “bear” began) through last Friday 6/24/2022 (8 days after the second “bear” bottomed). 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).

HALF OWNED BY JUST ONE PERCENT – The top 1% of American households own 53.9% of equities in the United States as of 12/31/2021, through direct ownership of individual stocks or through pooled funds (e.g., mutual funds) that invest in the stock market (source: Federal Reserve).

ALMOST NOTHING – The bottom 50% of American households own just 0.6% of equities in the United States as of 12/31/2021, through direct ownership of individual stocks or through pooled funds (e.g., mutual funds) that invest in the stock market (source: Federal Reserve).

HAS A REAL IMPACT – Every 1 percentage point increase in mortgage rates reduces property sales by 10%. The average rate on a 30-year fixed rate mortgage was 5.81% on 6/23/2022, up from 4.42% just 3 months earlier on 3/24/2022 (source: Federal Reserve Bank of New York).

A RECORD TOTAL – As of 3/31/2022, US single-family homes were worth $39.0 trillion, outstanding mortgages totaled $11.2 trillion, resulting in $27.8 trillion of home equity, an all-time record (source: Federal Reserve).

MAKE IT EASY – Legislation has been introduced in the Senate (in March 2022) and the House (on 6/16/2022) that would make it easier for US small businesses to offer retirement plans. The “Starter-K Act” would allow for pre-tax employee contributions up to $6,000, but would include reduced up-front employer set-up costs, and a provision that would make matching contributions optional for employers (source: Congress).

WHAT THE FED DID THEN – Inflation, as measured by the “Consumer Price Index,” was up +13.3% in 1979 and up +12.5% in 1980. The Fed funds rate, 8.5% as of 6/05/1980, was increased by the Fed to 20.0% just 6 months later (12/05/1980) to bring inflation under control. Inflation was up +7.0% in 2021 and the Fed funds rate is 1.75% today after 3 Fed rate hikes already in 2022 (source: Federal Reserve).

ALL IN THE SAME BOAT – As of 6/16/2022, central banks in 45 nations globally have raised interest rates in an effort to bring down the spending demand of consumers in their respective countries. The Federal Reserve has raised rates 3 times this year, most recently on Wednesday 6/15/2022. The hikes were 0.25 percentage points, 0.50 percentage points and 0.75 percentage points (source: FactSet).

TWO YEARS – Cleveland Federal Reserve President Loretta Mester, a current voting member of the Federal Market Open Committee (FMOC), said in a television interview on 6/19/2022 that it will take “a couple of years” for domestic inflation to drop down to the Fed’s +2% annual target rate (source: Face the Nation).

TRAVELING OVERSEAS – The US dollar has risen in value foreign currencies this year. E.g., 1,000 Euros cost $1,056 last Friday 6/24/2022. 1,000 Euros cost $1,193 on 6/24/2021 or a year ago (source: BTN Research).

THAT’S GOING TO HURT – The annual interest cost on the US national debt is forecasted to be $399 billion for the current 2022 fiscal year (i.e., the 12 months ending 9/30/2022), then rising to $1.194 trillion a decade down the road during fiscal year 2032. 10 years ago (fiscal year 2012), the annual interest cost on the national debt was $220 billion (source: Congressional Budget Office).

WE DO LIKE TO SPEND – The US national debt, $30.42 trillion as of Thursday 6/23/2022, is forecasted to increase +49% to $45.35 trillion as of 9/30/2032 or 10 years from now. The national debt was $16.07 trillion as of 9/30/2012 or 10 years ago (source: Congressional Budget Office).

THIS WILL GET MORE EXPENSIVE – Average credit card debt per household in the United States as of 3/31/2022 was $6,600 (source: Federal Reserve).

FLY AWAY – 2.43 million people went through TSA screening last Thursday 6/23/2022, quadrupled the 623,624 that did so 2 years earlier on 6/23/2020 (source: Transportation Security Administration).

OUT OF HERE! – Angels superstar Mike Trout hit 4 game-winning HRs in a 5-game series with the Mariners that ended on 6/19/2022, becoming the 1st player in history to hit 4 game-winning homers in a series (source: MLB).