By Maurice Stouse, Financial Advisor and Branch Manager
We are into an election year, the markets have made some extraordinary moves and we thought it was a good time to catch our breath and reflect on a few things. Davis Parrish, one of our advisors (in the Atlanta area) compiled some research (from Raymond James) for us and we wanted to share it with you here for your mid-year reading.
The Stock Markets:
As of June 21, the S&P 500 had surpassed its own record 31 times since the beginning of January. That equates to an all-time high every four trading days. This year marks the first election year since 1892 when both major party nominees have occupied the White House. Gains for the market have historically been higher when an incumbent president is running for reelection. The volatility index or “VIX,” as of June 28 was 12.36, which was down almost 8% for the year. The worker participation rate is now at 62.4%. That is the percentage of people 16 years old and older that are working or seeking work. That puts it just about at its average for the past 75 years. Unemployment approximates 4% of the workforce. Its highest rate was almost 11% back in 1982 and its lowest rate approximated 2.5% in 1953.
We have a few observations for our readers.
First is U.S. debt. Higher debt leads to higher debt service which could mean either higher taxes or less capital available for investment and growth and ultimately lowering living standards for Americans. Raymond James published an article in the first quarter of this year addressing U.S. debt. Let us know if you would like a copy.
Second, we encourage readers to research what the U.S. net worth is as well as the U.S. household net worth. That makes things a bit more encouraging since you might find that as debt has risen, so has wealth. And wealth is several times greater than the debt. There are a variety of sources online that address that. We are encouraged when we see U.S. worth at several times GDP and several times debt. The same for U.S. household net worth. Again, we remind readers that higher debt always leads to higher debt service and that is important to economic growth.
Third would be potential solutions for entitlements – mainly Social Security and Medicare. The last time that Congress took substantial action was in 1983 when Congress increased the full retirement age from 65 to 67 (for those born after 1960). That is being looked at again as the last time the FRA was extended, it also provided long-term solvency for several decades after. Other measures being considered are raising the cap of income where the Social Security tax is applied (there is no earnings cap for Medicare taxes). Regardless of how someone sees it, we remained encouraged that the U.S. has found the answer before and will find it again.
Maurice Stouse is a Financial Advisor and the branch manager of The First Wealth Management/ Raymond James. Main office located at The First Bank, 2000 98 Palms Blvd, Destin, FL 32451. Phone 850.654.8124. Raymond James advisors do not offer -tax advice. Please see your tax professionals. Email: Maurice.stouse@raymondjames.com.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC, and are not insured by bank insurance, the FDIC, or any other government agency, are not deposits or obligations of the bank, are not guaranteed by the bank, and are subject to risks, including the possible loss of principal. Investment Advisory Services are offered through Raymond James Financial Services Advisors, Inc. The First Wealth Management and The First Bank are not registered broker/dealers and are independent of Raymond James Financial Services.
Views expressed are the current opinion of the author and are subject to change without notice. The information provided is general in nature and is not a complete statement of all information necessary for making an investment decision and is not a recommendation or a solicitation to buy or sell any security. Past performance is not indicative of future results.Raymond James advisors do not provide tax or legal advice. Please see a tax professional for advice specific to your own situation.
The First Wealth Management/ Raymond James. Main office located at The First Bank, 2000 98 Palms Blvd, Destin, FL 32451. Phone 850.654.8124. Raymond James advisors do not offer -tax advice. Please see your tax professionals. Email: Maurice.stouse@raymondjames.com.
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