Have you prepared a long-term financial plan for your household? If you do, you're in the minority. According to a Gallup survey, only 43 percent of Americans with annual incomes greater than $75,000 bother to do so. Only 35 percent of the people in that income bracket work with a certified financial planner or accountant to set up a financial plan.
One thing most upper-income Americans do is use a computer or online program to help manage their money. Among those with an income of more than $75,000, some 53 percent reported doing so. But only around a quarter of the people in lower income brackets said they did even that.
The planning activity that is similar for all income ranges is preparing a monthly budget. While 39 percent of upper-income people do that, 30 percent of those in the $30,000 to $74,999 range report doing so, and 32 percent in the bottom bracket.
Tuesday, June 11, 2013
Monday, June 10, 2013
Strength in Banking
One sector that has really been doing well in our economy this year has been the banking industry. In the first quarter of this year, FDIC-insured institutions had net income of more than $40 billion. That's an increase of 16 percent over the same period in 2012.
The banking sector's profits have now increased on a year-over-year basis for 15 straight quarters - that's nearly four years. Basically, since the market rebounded in early 2009, the banking industry has been gaining strength. It's widespread, too - half of the 7,000 banks with FDIC insurance reported their earnings had increased last quarter.
For the year, through Friday, the S&P 500 has been very strong, showing an increase of 12.3 percent. But the financial sector within the S&P has been even stronger, rising by 21.3 percent.
The banking sector's profits have now increased on a year-over-year basis for 15 straight quarters - that's nearly four years. Basically, since the market rebounded in early 2009, the banking industry has been gaining strength. It's widespread, too - half of the 7,000 banks with FDIC insurance reported their earnings had increased last quarter.
For the year, through Friday, the S&P 500 has been very strong, showing an increase of 12.3 percent. But the financial sector within the S&P has been even stronger, rising by 21.3 percent.
Friday, June 7, 2013
The New Normal
This morning's jobs report fit squarely into the "new normal" we've seen in recent months, with the economy adding 175,000 new jobs in May. Over the past 12 months, the economy has added an average of 172,000 jobs per month, so we were right on that mark in May. Nevertheless, the headline unemployment figure ticked up to 7.6 percent.
One thing that has helped that headline number in recent months is that the number of jobs added in prior months has been frequently revised upward. That didn't happen with May's report. The jobs figure for March was revised upward from 138,000 to 142,000, but April's notched down from 165,000 to 149,000. That's a net loss from the previous two months of 12,000 jobs.
The strongest industries in this morning's report were professional and business services, which added 57,000 jobs in May; food services and drinking places, which added 38,000; and retail trade, which added 28,000. The biggest job-losing category was the federal government, which dropped 14,000 jobs.
One thing that has helped that headline number in recent months is that the number of jobs added in prior months has been frequently revised upward. That didn't happen with May's report. The jobs figure for March was revised upward from 138,000 to 142,000, but April's notched down from 165,000 to 149,000. That's a net loss from the previous two months of 12,000 jobs.
The strongest industries in this morning's report were professional and business services, which added 57,000 jobs in May; food services and drinking places, which added 38,000; and retail trade, which added 28,000. The biggest job-losing category was the federal government, which dropped 14,000 jobs.
Thursday, June 6, 2013
Two Sides of the Coin
Two halves of the economy appear to be moving in different directions, according to some economic indicators that have come out this week. While the manufacturing sector shows signs of struggling, the service sector is signaling growth ahead.
Let's do the bad news first: The Institute for Supply Management's factory index shrank in May, and is now down to its lowest level since June 2009. It was the third straight month in which that figure declined. The number dropped from 50.7 to 49, which troubling in a measure where 50 represents the dividing line between growth and decline.
But the services part of the economy continues to grow. According to the ISM's non-manufacturing index, growth in the service industries picked up speed in May. Using the same scale as the manufacturing index, the service index is now at 53.7.
Let's do the bad news first: The Institute for Supply Management's factory index shrank in May, and is now down to its lowest level since June 2009. It was the third straight month in which that figure declined. The number dropped from 50.7 to 49, which troubling in a measure where 50 represents the dividing line between growth and decline.
But the services part of the economy continues to grow. According to the ISM's non-manufacturing index, growth in the service industries picked up speed in May. Using the same scale as the manufacturing index, the service index is now at 53.7.
Wednesday, June 5, 2013
Tuesday's Gone
All good things must come to an end: After posting gains for 20 consecutive Tuesdays, a streak running back to January 8th, the Dow Jones Industrial Average finally lost ground yesterday, breaking the string. The Dow finished the day down 76 points, or 0.5 percent.
The five-month-long run was, needless to say, a record for Tuesdays, at least going back to 1900. While the Tuesday streak lasted, the Dow rose by more than 1900 points - and a full 83 percent of those gains had come on Tuesdays. Mondays, by contrast, have actually been negative on the whole for 2013.
The 20-day winning streak isn't a record, though. Schaeffer's Investment Research did uncover one longer weekday streak: There was a string of 24 straight gains on Wednesdays back in 1968.
The five-month-long run was, needless to say, a record for Tuesdays, at least going back to 1900. While the Tuesday streak lasted, the Dow rose by more than 1900 points - and a full 83 percent of those gains had come on Tuesdays. Mondays, by contrast, have actually been negative on the whole for 2013.
The 20-day winning streak isn't a record, though. Schaeffer's Investment Research did uncover one longer weekday streak: There was a string of 24 straight gains on Wednesdays back in 1968.
Tuesday, June 4, 2013
Carmakers Pick Up Speed
The American automaking business appears to be taking a couple of steps forward this week. U.S. consumers bought 1.4 million vehicles in the month of May, which was up 8 percent from the year-earlier period. They've also hired more than 14,000 workers so far this year, and the Center for Automotive Research projects that the car industry will add 35,000 jobs in 2013.
Pickup trucks look like the strongest category right now. General Motors and Chrysler both posted 20 percent gains in sales of full-size pickups for the month. The Ford F-Series pickup, which is the best-selling vehicle in America right now, reached a six-year high by moving more than 70,000 trucks in May.
In a measure of how far things have come, General Motors - which went into bankruptcy in 2009 - will be returning to the S&P 500 index on Thursday. GM will be replacing Heinz, which is going private after being bought up in part by Warren Buffett.
Pickup trucks look like the strongest category right now. General Motors and Chrysler both posted 20 percent gains in sales of full-size pickups for the month. The Ford F-Series pickup, which is the best-selling vehicle in America right now, reached a six-year high by moving more than 70,000 trucks in May.
In a measure of how far things have come, General Motors - which went into bankruptcy in 2009 - will be returning to the S&P 500 index on Thursday. GM will be replacing Heinz, which is going private after being bought up in part by Warren Buffett.
Monday, June 3, 2013
Stock Prices May Be Getting Pricey
Is this stock market getting overpriced? By some measures, it may be getting a little pricey. The most common measure used for stocks is price-to-earnings ratio, of course, and that has been creeping up lately. The S&P now trades at 14.4 times its expected earnings, up from 13.5 earlier in the year. The current P/E ratio is the highest it's been since 2010.
Then again, the P/E ratio for the S&P 500 was significantly higher in 2010. At the beginning of that year, it ticked over 17. And of course, the market was just at the beginning of a multi-year bull run that has continued to this day.
Within that narrow band of movement, between 13 and 17, it's likely that the P/E ratio doesn't serve as a strong indicator either way. You can see that fact in evidence by looking at the price-to-earnings ratios from 2007, just before the market began plunging. At that point, P/E ratios gave no indication that the market was headed for a fall.
Then again, the P/E ratio for the S&P 500 was significantly higher in 2010. At the beginning of that year, it ticked over 17. And of course, the market was just at the beginning of a multi-year bull run that has continued to this day.
Within that narrow band of movement, between 13 and 17, it's likely that the P/E ratio doesn't serve as a strong indicator either way. You can see that fact in evidence by looking at the price-to-earnings ratios from 2007, just before the market began plunging. At that point, P/E ratios gave no indication that the market was headed for a fall.
Subscribe to:
Posts (Atom)