If you've been wondering why your $1,200 stimulus payment hasn't shown up yet, it might be because you make too much money. The CARES Act authorized $1,200 payments to individuals making below $75,000 and $2,400 to married couples earning under $150,000.
The payments decline by $5 for every $100 above the $75,000 or $150,000 threshold. Anyone making over $99,000, then, doesn’t qualify, nor do couples making over $198,000.
But don't give up hope. People who exceed the income limit might still have a chance at the money — next year. That’s because the stimulus payments are technically an advance credit for next year’s tax season. The credit is just being paid right now.
Thursday, April 30, 2020
Wednesday, April 29, 2020
First Quarter GDP
This is not too much of a surprise: The American economy shrank at a 4.8 percent annualized pace in the first quarter, according to numbers out from the Commerce Department this morning. The downturn was led by the steepest drop in consumer spending since 1980 and the fastest decline in business investment in almost 11 years.
The first quarter marked the first negative GDP reading since the 1.1 percent decline in the first quarter of 2014. It was the worst overall quarter since the 8.4 percent plunge in the fourth quarter of 2008 during the worst of the financial crisis. And remember, it wasn't until March that the shutdowns began.
Consumer spending, which makes up 67 percent of total GDP, plunged 7.6 percent in the quarter as all nonessential stores were closed and the cornerstone of the U.S. economy was taken almost completely out of commission. Durable goods spending tumbled 16.1 percent while expenditures on services were down 10.2 percent.
The first quarter marked the first negative GDP reading since the 1.1 percent decline in the first quarter of 2014. It was the worst overall quarter since the 8.4 percent plunge in the fourth quarter of 2008 during the worst of the financial crisis. And remember, it wasn't until March that the shutdowns began.
Consumer spending, which makes up 67 percent of total GDP, plunged 7.6 percent in the quarter as all nonessential stores were closed and the cornerstone of the U.S. economy was taken almost completely out of commission. Durable goods spending tumbled 16.1 percent while expenditures on services were down 10.2 percent.
Tuesday, April 28, 2020
Retirement Still on Track for Most Americans
Even in the midst of the coronavirus pandemic, many Americans said their retirement expectations are the same as they were last year, according to a new Gallup poll of Americans’ retirement visions. The average expected retirement age was 66 years old — up just one year from 65 in 2018.
How savers plan to fund that retirement is mixed. Some 80 percent of non-retired Americans say they expect to lean on their savings in a 401(k) plan, individual retirement account or other retirement-specific account. Slightly less than three-quarters said they’d use other savings, such as in a CD. Seven in 10 people said they’ll work part time in retirement.
Gallup also asked how much they will need these sources of income. More than half (53 percent) of people said their retirement savings would be a major source of income in their later years, and 27 percent said a minor source.
How savers plan to fund that retirement is mixed. Some 80 percent of non-retired Americans say they expect to lean on their savings in a 401(k) plan, individual retirement account or other retirement-specific account. Slightly less than three-quarters said they’d use other savings, such as in a CD. Seven in 10 people said they’ll work part time in retirement.
Gallup also asked how much they will need these sources of income. More than half (53 percent) of people said their retirement savings would be a major source of income in their later years, and 27 percent said a minor source.
Monday, April 27, 2020
Retirement Accounts Are Still Growing
Some good news regarding people keeping their eye on the long term: Despite huge market swings in the first quarter, the majority of retirement savers continued to add to their nest eggs. The average 401(k) contribution rate remained steady at 8.9 percent, consistent with the previous quarter, according to new data from Fidelity Investments.
Not only that, 15 percent of 401(k) savers actually increased their contribution rate in the first quarter. The average employer contribution also held steady at 4.7 percent, up from 4.6 percent in the previous quarter and consistent with 4.7 percent in the 2019 first quarter.
In other types of retirement accounts, the average amount investors contributed to an IRA increased by 10 percent year over year to $3,330, up 10 percent over the average contribution amount in last year’s fourth quarter. Contributions to 403(b)/tax-exempt accounts also increased, to 6.9 percent from 5.6 percent in the fourth quarter and 5.4 percent a year ago.
Not only that, 15 percent of 401(k) savers actually increased their contribution rate in the first quarter. The average employer contribution also held steady at 4.7 percent, up from 4.6 percent in the previous quarter and consistent with 4.7 percent in the 2019 first quarter.
In other types of retirement accounts, the average amount investors contributed to an IRA increased by 10 percent year over year to $3,330, up 10 percent over the average contribution amount in last year’s fourth quarter. Contributions to 403(b)/tax-exempt accounts also increased, to 6.9 percent from 5.6 percent in the fourth quarter and 5.4 percent a year ago.
Friday, April 24, 2020
The Changing World of the Office
How will the corporate world be changed by coronavirus? Nothing will be the same when America goes back to the office, says Carol Bartz, who led the software company Autodesk for a decade. One of those changes will be the floor plan.
“I think office space is going to change,” she told the website MarketWatch. "We will go back to putting shields between people." She claimed that this will probably be the first time offices will have to be designed around health reasons.
"You will not sit there in that big open space," Bartz said. "I think people are going to want protection, plexiglass or whatever. There will also be more teleconferencing, absolutely less flying, you will teleconference with customers - they don’t want to see you in person and you don’t want to see them."
“I think office space is going to change,” she told the website MarketWatch. "We will go back to putting shields between people." She claimed that this will probably be the first time offices will have to be designed around health reasons.
"You will not sit there in that big open space," Bartz said. "I think people are going to want protection, plexiglass or whatever. There will also be more teleconferencing, absolutely less flying, you will teleconference with customers - they don’t want to see you in person and you don’t want to see them."
Thursday, April 23, 2020
Consumers Are (Slightly) More Optimistic
The confidence Americans felt in the economy sank at record speed in the past month as the devastation from the coronavirus spread, but they are apparently more hopeful now that the worst of the damage has been done. Those are the findings in a weekly survey of consumer confidence conducted by an organization called Morning Consult.
Not surprisingly, the Morning Consult index had been in a freefall the past few weeks, diving to a record low of 81.23 in the first week of April, That followed a record high of 115.7 in February.
Since then, it has edged up a few points. Why is that? Americans are still extremely worried about the economy right now. What’s nudged confidence higher is the increasing belief that the economy will be slightly better off in the long term, 12 months from now.
Not surprisingly, the Morning Consult index had been in a freefall the past few weeks, diving to a record low of 81.23 in the first week of April, That followed a record high of 115.7 in February.
Since then, it has edged up a few points. Why is that? Americans are still extremely worried about the economy right now. What’s nudged confidence higher is the increasing belief that the economy will be slightly better off in the long term, 12 months from now.
Wednesday, April 22, 2020
Another Rough Day on Wall Street
After a couple of weeks when the market looked stronger, U.S. stocks suffered significant drops yesterday. The S&P 500 Index sank 3.1 percent and is now 19.2 percent below its record closing level set February 19. This was its worst decline since it fell 4.4 percent on April 1.
The technology sector led the market lower, with the sector as a whole dropping 4.1 percent on the day. In the S&P as a whole, 470 of its 500 stocks declined. All but one of the Dow's 30 components ended the day down, with only Travelers holding steady on the day.
Surprisingly, the energy sector was not especially hard hit. It was down 1.7 percent on the day, but that was still the third-best performance among the S&P's 11 sectors.
The technology sector led the market lower, with the sector as a whole dropping 4.1 percent on the day. In the S&P as a whole, 470 of its 500 stocks declined. All but one of the Dow's 30 components ended the day down, with only Travelers holding steady on the day.
Surprisingly, the energy sector was not especially hard hit. It was down 1.7 percent on the day, but that was still the third-best performance among the S&P's 11 sectors.
Tuesday, April 21, 2020
What Happened to Oil Prices?
How did crude futures drop into negative territory yesterday, trading at one point at minus $14.04 per barrel? Basically because nobody's buying it right now. The only buyers of oil futures are entities that want to physically take delivery of it, like a refinery or an airline. But demand has dropped and storage tanks are filled, so they don’t need it.
One thing that tripped the switch was a report from the International Energy Agency, which warned that demand in April could be 29 million barrels per day lower than a year ago, hitting a level last seen in 1995. And with places to store the crude quickly filling, some experts feel that prices could stay low for a lot longer.
But it looks like the negative price was a one-day anomaly. West Texas Intermediate crude futures for May delivery turned positive in overnight trading, with the May contract trading at $1.17 per barrel by the evening.
One thing that tripped the switch was a report from the International Energy Agency, which warned that demand in April could be 29 million barrels per day lower than a year ago, hitting a level last seen in 1995. And with places to store the crude quickly filling, some experts feel that prices could stay low for a lot longer.
But it looks like the negative price was a one-day anomaly. West Texas Intermediate crude futures for May delivery turned positive in overnight trading, with the May contract trading at $1.17 per barrel by the evening.
Monday, April 20, 2020
What to Expect From Earnings Season
First quarter earnings began to roll in during the past week, starting with the major banks. So far, based on actual reports and forecasts, first quarter earnings are expected to be down 14.5 percent, which would be the worst quarter since earnings declined by more than 15 percent in the third quarter of 2009.
Things don't look to be getting better any time soon. In the second quarter, the stock research firm Refinitiv expects a much sharper 27.3 percent decline.
IBM, Netflix, Coca-Cola and dozens of others are expected to report earnings this week. But at this point and for the time being, the market is more likely to trade on virus headlines and news about reopening the economy than about earnings reports.
Things don't look to be getting better any time soon. In the second quarter, the stock research firm Refinitiv expects a much sharper 27.3 percent decline.
IBM, Netflix, Coca-Cola and dozens of others are expected to report earnings this week. But at this point and for the time being, the market is more likely to trade on virus headlines and news about reopening the economy than about earnings reports.
Friday, April 17, 2020
A Glimmer of Good News
It was a good day on Wall Street yesterday, following a report from health-care media site Stat News that indicated promising results for a drug used to treat COVID-19. Buoyed by the news, the S&P 500 rose by 1.6 percent on the day.
University of Chicago Medicine researchers saw “rapid recoveries” in 125 patients suffering from COVID-19 who were taking Gilead Sciences’s experimental drug remdesivir as part of a clinical trial. As a result, Gilead's share price jumped nearly 8 percent on the day.
But be warned that we are still a long way from a treatment. A statement from the University of Chicago Medicine said that “drawing any conclusions at this point is premature and scientifically unsound.”
University of Chicago Medicine researchers saw “rapid recoveries” in 125 patients suffering from COVID-19 who were taking Gilead Sciences’s experimental drug remdesivir as part of a clinical trial. As a result, Gilead's share price jumped nearly 8 percent on the day.
But be warned that we are still a long way from a treatment. A statement from the University of Chicago Medicine said that “drawing any conclusions at this point is premature and scientifically unsound.”
Wednesday, April 15, 2020
March's Economic Decline
New data out this morning showed the hit to the economy from the coronavirus was even swifter and deeper in the early weeks of the shutdown than expected. Consumer and manufacturing data for the month of March showed record declines in some areas.
March retail sales fell 8.7 percent, a record drop, with the only sign of activity at grocery and beverage stores, which saw sales grow by 25.6 percent. The consumer accounts for 70 percent of the economy. Meanwhile, New York regional manufacturing activity hit an all-time low, declining 78.2 percent.
If there's a bright spot, it's that some sales categories actually improved in March. They include building materials, up 1.3 percent, and health and personal care, which climbed 4.3 percent.
March retail sales fell 8.7 percent, a record drop, with the only sign of activity at grocery and beverage stores, which saw sales grow by 25.6 percent. The consumer accounts for 70 percent of the economy. Meanwhile, New York regional manufacturing activity hit an all-time low, declining 78.2 percent.
If there's a bright spot, it's that some sales categories actually improved in March. They include building materials, up 1.3 percent, and health and personal care, which climbed 4.3 percent.
Monday, April 13, 2020
Gas Bottoms Out
The national average for a gallon of gas — $1.883 as of Friday, according to the latest data from AAA — is the cheapest it's been in more than four years. In just the last month, the national average per gallon has dropped 48 cents, and current prices are 32 percent below what you paid a year ago.
Here in Tennessee, the average price of a gallon of gas currently sits at $1.77. That's 45 cents less than one month ago and nearly 71 cents less than one year ago. A BP station in London, Kentucky, just north of Knoxville, is apparently the first in the nation to drop its gas prices to 99 cents per gallon.
Relatedly, demand for gas is at its lowest level since 1968, according to Oil Price Information Services. Data from the Energy Information Administration shows that for the week ending April 3, gas usage had fallen 48 percent year-over-year, to 5.065 million barrels per day.
Here in Tennessee, the average price of a gallon of gas currently sits at $1.77. That's 45 cents less than one month ago and nearly 71 cents less than one year ago. A BP station in London, Kentucky, just north of Knoxville, is apparently the first in the nation to drop its gas prices to 99 cents per gallon.
Relatedly, demand for gas is at its lowest level since 1968, according to Oil Price Information Services. Data from the Energy Information Administration shows that for the week ending April 3, gas usage had fallen 48 percent year-over-year, to 5.065 million barrels per day.
Friday, April 10, 2020
A Bit of Recovery for the Markets
The markets are closed today for Good Friday, but they don't need an extra day to post big gains for the week. The S&P 500 surged 12.1 percent on the week, marking its biggest one-week gain since 1974, when it rallied more than 14 percent.
Similarly, the Nasdaq had its best week since 2009, jumping 10.6 percent. The Dow rose more than 12 percent for one of its biggest weekly gains on record.
We are probably in for more economic difficulty in the weeks ahead, but this was a nice breather. And we've still got a long way to go: The Dow is up more than 27 percent from its March closing low, but still down 16.9 percent on the year.
Similarly, the Nasdaq had its best week since 2009, jumping 10.6 percent. The Dow rose more than 12 percent for one of its biggest weekly gains on record.
We are probably in for more economic difficulty in the weeks ahead, but this was a nice breather. And we've still got a long way to go: The Dow is up more than 27 percent from its March closing low, but still down 16.9 percent on the year.
Thursday, April 9, 2020
A Nation on the Couch
What's everyone doing during the quarantine? They're watching television - on March 31, Nielsen said that streaming viewership jumped 22 percent during the week of March 16 versus the prior week. And that's paying off for some streaming companies.
Disney announced yesterday that Disney+, its new video service, now has more than 50 million subscribers. That’s almost twice as many as Disney reported on February 4, when it said that Disney+ reached 26.5 million subscribers during the first quarter.
Netflix has more than 167 million paying subscribers globally, 60.4 million of them in the U.S. Roughly 34.3 million of those people watched the Netflix series Tiger King: Murder, Mayhem and Madness in the first 10 days after its release on March 20.
Disney announced yesterday that Disney+, its new video service, now has more than 50 million subscribers. That’s almost twice as many as Disney reported on February 4, when it said that Disney+ reached 26.5 million subscribers during the first quarter.
Netflix has more than 167 million paying subscribers globally, 60.4 million of them in the U.S. Roughly 34.3 million of those people watched the Netflix series Tiger King: Murder, Mayhem and Madness in the first 10 days after its release on March 20.
Wednesday, April 8, 2020
This Volatile Market
How volatile has the market been lately? Over the last five weeks, the S&P 500's average absolute daily percentage change has been plus or minus 4.8 percent. That's higher than we saw at the height of the financial crisis or after the 1987 crash. The only time the S&P's average daily move over a five-week period was greater was after the Crash of 1929.
The S&P 500 calmed down a little yesterday, dropping by just 0.16 percent and breaking a string of 12 straight days of moving up or down 1 percent or more. Those 12 days were a longer streak than anything seen during the financial crisis.
What makes this current streak even more notable is that it was almost the second 13-day streak of 1 percent moves in the last 27 trading days. From March 2 through 18, the S&P 500 went 13 straight days of moving up or down 1 percent. It broke that streak in March 19 by rallying just 0.47 percent. So in the last five weeks the S&P 500 has seen a 1 percent move 23 times in 25 trading days.
The S&P 500 calmed down a little yesterday, dropping by just 0.16 percent and breaking a string of 12 straight days of moving up or down 1 percent or more. Those 12 days were a longer streak than anything seen during the financial crisis.
What makes this current streak even more notable is that it was almost the second 13-day streak of 1 percent moves in the last 27 trading days. From March 2 through 18, the S&P 500 went 13 straight days of moving up or down 1 percent. It broke that streak in March 19 by rallying just 0.47 percent. So in the last five weeks the S&P 500 has seen a 1 percent move 23 times in 25 trading days.
Tuesday, April 7, 2020
Retail and Leisure's Comeback
The Wall Street roller coaster soared upward yesterday, with the S&P 500 Index adding 7 percent. It's now 21.3 percent below its peak closing high of February 19 and close to the level where it began 2019.
Some of the retail and leisure stocks that have been hit hardest during the crisis enjoyed double-digit increases yesterday, led by PVH, which owns such brands as Van Heusen, Tommy Hilfiger, Calvin Klein and IZOD. Monday's S&P's strongest performers:
Some of the retail and leisure stocks that have been hit hardest during the crisis enjoyed double-digit increases yesterday, led by PVH, which owns such brands as Van Heusen, Tommy Hilfiger, Calvin Klein and IZOD. Monday's S&P's strongest performers:
- PVH Corp., up 28.1 percent
- Capri Holdings, up 25.9 percent
- Nordstrom, up 24.1 percent
- Kohl's, up 22.9 percent
- MGM Resorts International, up 22.0 percent
- Royal Caribbean Cruises, up 21.4 percent
- Ulta Beauty, up 20.4 percent
- Carnival, up 20.3 percent
- Marriott International, up 19.5 percent
- Boeing, up 19.5 percent
- Norwegian Cruise Line, up 18.3 percent
Monday, April 6, 2020
What's Going On with Oil Prices
West Texas Intermediate oil prices, the benchmark for the U.S., ended last week 31.8 percent higher, posting the largest one-week percentage rise on record. Despite that surge, crude is still down nearly 40 percent in the last month on the heels of demand destruction from the coronavirus outbreak, and the price war between Saudi Arabia and Russia.
If you still have a reason to drive, it's gotten a lot cheaper lately. Tennessee's average gasoline price currently sits at $1.77 a gallon. That's 45 cents less than one month ago and nearly 71 cents less than one year ago.
OPEC and its allies, including Russia, will convene this week in an attempt to forge a truce in the price war. Most observers argue that some sort of deal will most likely be reached, since it is in producers’ best interest to have higher oil prices.
If you still have a reason to drive, it's gotten a lot cheaper lately. Tennessee's average gasoline price currently sits at $1.77 a gallon. That's 45 cents less than one month ago and nearly 71 cents less than one year ago.
OPEC and its allies, including Russia, will convene this week in an attempt to forge a truce in the price war. Most observers argue that some sort of deal will most likely be reached, since it is in producers’ best interest to have higher oil prices.
Friday, April 3, 2020
March Jobs Report
The American economy lost 701,000 jobs in March, according to Labor Department numbers released this morning. It was the first decline in payrolls since September 2010 and came close to the May 2009 financial crisis peak of 800,000. The unemployment rate rose to 4.4 percent, up from 3.5 percent, to reach its highest level since August 2017.
As bad as these numbers are, there's good reason to think they're understated. The Bureau of Labor Statistics used as its reference period the week ending March 12, which was when the nation began shutting down. The weekly initial jobless claims reports have shown 10 million new filings for unemployment insurance over the past two weeks.
Some two-thirds of March's drop came in the hospitality industry, particularly bars and restaurants forced to close during the economic shutdown. That sector suffered 459,000 job losses, with 417,000 coming from food and drinking establishments. The Bureau of Labor Statistics noted that the drop nearly wiped out all of the gains from the past two years.
As bad as these numbers are, there's good reason to think they're understated. The Bureau of Labor Statistics used as its reference period the week ending March 12, which was when the nation began shutting down. The weekly initial jobless claims reports have shown 10 million new filings for unemployment insurance over the past two weeks.
Some two-thirds of March's drop came in the hospitality industry, particularly bars and restaurants forced to close during the economic shutdown. That sector suffered 459,000 job losses, with 417,000 coming from food and drinking establishments. The Bureau of Labor Statistics noted that the drop nearly wiped out all of the gains from the past two years.
Thursday, April 2, 2020
Americans Worried, but Holding Fast
The stock market crash has left Americans wondering whether worse is yet to come, Allianz Life found in its latest quarterly market perceptions study. Sixty-three percent of participants in the study expressed concerns about a recession, up from 43 percent in the fourth quarter, and 57 percent thought that the market had not bottomed out.
But most of them are holding fast. Notwithstanding their anxiety over market swings, 52 percent of Americans said now was a good time to stay neutral and not take any action because of market conditions.
Americans in the survey also appeared optimistic that they would eventually be able to recover their retirement savings. Seven in 10 respondents believed that they would have time to rebuild their retirement nest eggs even if the market continued to fall.
But most of them are holding fast. Notwithstanding their anxiety over market swings, 52 percent of Americans said now was a good time to stay neutral and not take any action because of market conditions.
Americans in the survey also appeared optimistic that they would eventually be able to recover their retirement savings. Seven in 10 respondents believed that they would have time to rebuild their retirement nest eggs even if the market continued to fall.
Wednesday, April 1, 2020
First Quarter Is Finally Over
Yesterday, the final day of March and of the first quarter, the Dow Jones Industrial Average fell by 1.8 percent. Overall, the index was down 23.2 percent for the first quarter, That was its biggest decline since the fourth quarter of 1987, the year that Black Monday occurred, on October 19.
The S&P 500 Index ended with a first-quarter decline of 20 percent, its biggest quarterly loss since 2008. It was also the S&P's worst first quarter ever. The Nasdaq suffered a first-quarter decline of 14.2 percent.
The only Dow stock that rose during the first quarter? Microsoft. It closed at $157.71 yesterday, up exactly one penny from its $157.70 close on December 31.
The S&P 500 Index ended with a first-quarter decline of 20 percent, its biggest quarterly loss since 2008. It was also the S&P's worst first quarter ever. The Nasdaq suffered a first-quarter decline of 14.2 percent.
The only Dow stock that rose during the first quarter? Microsoft. It closed at $157.71 yesterday, up exactly one penny from its $157.70 close on December 31.
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