Tuesday, January 24, 2017

A Weakening Dollar?

Has the dollar finally broken its run of strength? With the new presidential administration talking about how it's too strong, its value has been slipping the past few days.

The dollar index, which tracks the greenback against a basket of six major peers, slipped 0.1 percent yesterday to 100.060, its lowest level since December 8. Against the Japanese yen, the dollar was its weakest since November 30.    

This could be good news for the economy. A 2015 study by the New York Federal Reserve calculated that a 10 percent dollar appreciation over three months knocks roughly 0.5 percentage points off the growth rate over one year, and another 0.2 percentage points the subsequent year if the currency's strength persists.

Monday, January 23, 2017

A Small-Business Problem

Small businesses are in many ways the engine of the American economy, but they tend to be hampered by one crucial problem. At companies with fewer than 50 workers, not even half the employees have access to a 401(k) or pension, according to the Bureau of Labor Statistics. By contrast, at companies with 500 workers or more, 90 percent of employees have access to a retirement plan.

This leaves millions of Americans without an easy way to save for their futures. Companies with fewer than 100 workers employ 36 percent of the U.S. workforce, or about 42 million people.

There are options for small-business owners on the way, though. New Jersey has become one of the few states that is working on setting up a retirement plan marketplace, where employers can shop for lower-cost retirement plans.

Friday, January 20, 2017

Exciting News in Jobless Claims

Of all the economic indicators, none has been more surprising in its consistent strength than new jobless claims. The current level of 234,000 new unemployment claims from last week is just 1,000 above the recent low of 233,000 from early November, and marks the 98th straight week where claims have been below 300,000.

But even more significant is the four-week moving average, which gives us a broader picture. With this week’s low reading in claims, the four-week moving average fell by 9,750 to 246,750.  A drop of 9,750 may not sound like much, but it was the largest one-week decline in the four-week average since March 2015. 

Moreover, the last time the four-week moving average was this low was in 1973. At that point, the American population was less than two-thirds the size it is now.

Thursday, January 19, 2017

Retiring Abroad

Have you looked overseas for a retirement option? Between 2010 and 2015, the number of Americans who retired abroad increased 17 percent. A report from the Associated Press says that even more retirees are expected to follow their lead over the next 10 years, as the baby boomers continue to leave the workplace.

The Social Security Administration puts the number of American seniors living abroad at just under 400,000. The most popular destinations are Canada, Japan, Mexico, Germany and the U.K.

Japan, which has a large U.S. military presence, has seen the biggest uptick in American retirees in recent years. For the five years from 2010 to 2015, the number of Americans retiring there increased by 42 percent.

Wednesday, January 18, 2017

Older Americans and Student Debt

The number of people 60 and older with student loan debt has quadrupled in the past decade, but it's not what you might be thinking. These aren't old loans: The vast majority are loans taken out by parents or grandparents to finance education opportunities for young people, with 73 percent of borrowers over 60 reporting that their student loan debt is owed "for a child's and/or grandchild's education."

Older Americans now represent the fastest-growing segment of the U.S. student loan market, according to a new report by the Consumer Financial Protection Bureau. As of 2015, more than 2.8 million Americans over 60 had outstanding student loan debt — up from some 700,000 in 2005.

The average amount owed has also increased dramatically. In 2005, the average amount owed by borrowers 60 and older was about $12,000; by 2015, it was more than $23,000.

Tuesday, January 17, 2017

Here Come the Robots

Are you likely to be replaced by a robot? Probably not: Less than 5 percent of all occupations can be fully replaced by the technology we have today,  a McKinsey Global Institute study released last week found.

On the other hand, most industries do have some tasks that can be replaced by automation. The study found that 60 percent of all occupations have about 30 percent of tasks that could be turned over to automation. Half of today’s work tasks could be automated by 2055, give or take 20 years, according to the report.

But it's expected to be good for the world's economy. The report estimated that automation could lead to productivity growth of 0.8 to 1.4 percent annually for the major global economies.

Monday, January 16, 2017

Good News for Big Banks

JP Morgan Chase and Bank of America kicked off the banking sector's fourth-quarter reporting season with strong profits. JP Morgan, the largest U.S. bank by assets, reported a 24 percent increase in fourth-quarter profit to $6.73 billion on Friday. Bank of America’s profits soared 43 percent, rising to $4.7 billion from the previous quarter.

The third big bank to report, Wells Fargo, fell short. The bank reported earnings per share of 96 cents on revenue of $21.58 billion; those numbers were lower than the $1.00 and $22.45 billion that analysts were expecting. The fourth quarter was the first full quarter since Wells Fargo's fraudulent-accounts scandal came to light.

The SPDR S&P Bank ETF , a bellwether for the entire banking sector, has shot up more than 24 percent since the election. The broader financials sector is up 17 percent, making it the top performer in the S&P 500 over that time.