Friday, May 25, 2018

The Good News on Student Loans

In this season of graduation, many of us are thinking about student loans. The news in that area is fairly good: The share of new delinquencies on student loans has fallen to its lowest level in more than decade. In the first quarter, slightly over 9 percent of student debt outstanding was newly delinquent, based on figures from the Federal Reserve Bank of New York.

In the first quarter, 10.7 percent of overall student-loan debt was considered delinquent, meaning a payment hadn’t been made on the debt in at least 90 days. This figure marked the smallest share of student-loan borrowers in serious delinquency since 2012.

During the recession, delinquencies across categories of debt--including auto loans and credit-card debt--spiked. Around 2011, debt delinquencies reversed course, except for student-loan delinquencies, which rose through 2012 and remained at an elevated level for several years. The student-loan delinquency rate is still far higher than rates for any other type of consumer debt.

Thursday, May 24, 2018

Another Rate Hike Seems Likely

Federal Reserve officials in their meeting in early May confirmed they planned to raise interest rates in June and were not concerned they were behind the curve on inflation. That was the primary takeaway from that meeting, whose minutes were released to the public yesterday afternoon.

“Most participants judged that if incoming information broadly confirmed their economic outlook, it would likely soon be appropriate for the FOMC to take another step in removing policy accommodation,” the minutes said. Traders in the federal funds futures market see more than a 90 percent chance of a June rate hike.

Although inflation hit the Fed’s 2 percent target in the latest reading for March, for the first time in a year, officials were not convinced it would remain there for long. “It was noted that it was premature to conclude that inflation would remain at levels around 2 percent, especially after several years in which inflation had persistently run below the Fed’s 2 percent objective,” the minutes said. Only a “few” officials thought inflation might move “slightly” above the 2 percent target.

Wednesday, May 23, 2018

A Big Quarter for Banks

Bank profits soared by 28 percent during the first quarter of 2018 to $56 billion, according to statistics published this week by the FDIC. The blockbuster earnings report easily tops the prior record set just three quarters earlier.

The FDIC said that 70 percent of the nation's 5,606 banks grew their bottom line during the last quarter. The percentage of money-losing banks dropped to just 3.9 percent. The FDIC's list of problem banks fell to just 92, the lowest that figure has been since the first quarter of 2008.

The financial industry owes a chunk of the mega earnings to the corporate tax cut passed at the end of last year. The FDIC said the tax law boosted bank profits by about $6.7 billion. However, banks would have still made a record $49.4 billion without the tax cuts.

Tuesday, May 22, 2018

Fortune's Top Ten

We are often in the habit of looking at America's biggest companies in terms of their market capitalization, but Fortune's venerable Fortune 500 list ranks corporations in terms of their revenues. That pushes the tech giants like Apple and Facebook down the list, in favor of the likes of Walmart, which is a clear No. 1 in this ranking. The top ten, with their 2017 revenues in millions:

  1. Walmart $500,343
  2. Exxon Mobil $244,363
  3. Berkshire Hathaway $242,137
  4. Apple $229,234
  5. UnitedHealth Group $201,159
  6. McKesson $198,533
  7. CVS Health $184,765
  8. $177,866
  9. AT&T $160,546
  10. General Motors $157,311
The least familiar name on that list is McKesson. What did they do to make $200 billion last year? McKesson sells medical supplies, pharmaceuticals, and other forms of medical technology.

Monday, May 21, 2018

What We Wish We'd Done

Regrets? We've had a few. A new survey from finds that not only do Americans have financial regrets, but they continue to procrastinate in addressing the issue, whatever it may be.

While the largest percentage of respondents, at 39 percent, say their biggest financial regret is not saving enough, the next largest, at 18 percent, say they wish they’d started saving for retirement earlier. Fourteen percent regret not saving enough for emergency expenses, and seven percent would have liked to have saved more for the kids’ education.

A whopping 49 percent of those who do have a regret say that they haven’t started to tackle it. Some plan to put it off indefinitely, with 25 percent saying they have no plans to address it; 19 percent think they’ll get around to it in the next year, while six percent say it will take them more than a year.

Friday, May 18, 2018

Sometimes You Have to Wait

More than one-third of Americans (35%) were forced to delay a major life decision in the last year because of finances, according to a new survey by the American Institute of Certified Public Accountants. That may sound like a lot, but it's actually a drop from the 51% who did so in 2015.

What are people delaying?

  • 14% of Americans waited to buy a home, compared to 22% in 2015.
  • 13% of Americans put off higher education, compared to 24% in 2015.
  • 12% of Americans put off a medical procedure, compared to 19% in 2015.
  • 10% delayed retirement, compared to 18% in 2015.
  • 7% delayed having children, compared to 13% in 2015.
  • 6% of people put off marriage, compared to 12% in 2015.

Thursday, May 17, 2018

What It Means to Be Wealthy

Charles Schwab has just come out with its annual Wealth Index. One of the most important questions it asks: What is the net worth an American needs to be “wealthy”? The answer: an average of $2.4 million, the same as last year, in the online survey of 1,000 Americans between age 21 and 75.

To be "financially comfortable" in America today isn't quite as difficult. That requires an average of $1.4 million, up from $1.2 million a year ago, according to the survey.

The survey also asked what made respondents feel “wealthy” in their daily lives. Spending time with family was most commonly cited, at 62 percent overall, followed by “taking time for myself,” which came in at 55 percent.