Remembering Black Monday

Thirty years ago, on October 19, 1987, the stock market experienced what became known as Black Monday, when the Dow Jones industrial average experienced its largest percentage single-day drop ever, losing 22.6 percent of its value. Some other facts about that day:

• The market as a whole lost roughly $1 trillion in value on Black Monday
• The crash came after a two-week period in which the Dow had already dropped 15 percent
• The 604 million shares traded nearly doubled the previous record for volume
• The Dow's second-worst percentage loss was just 7.9 percent, on October 15, 2008 
• The Dow did not surpass its pre-Black Monday level until January 1989

Savvy New Jersey

What's the most financially savvy state? It's not New Jersey, which comes in at Number Five, according to a new survey from WalletHub. It's Massachusetts, followed by New Hampshire and Connecticut.

But New Jersey’s overall score was good enough to get it into fifth place. It ranked second for the lowest total debt as a percentage of median income and for the lowest percentage of credit usage, as well as in the top five in the categories of debt and spending, and saving.

When it came to financial literacy and credit, our state didn’t do anywhere near as well, though, with ranks of 16 and 27, respectively. And it was tied for 50th place for the highest foreclosure rate in the country.

The Optimism of Older Americans

Older Americans’ cheeriness about the U.S. economy is increasing at a swift clip, but younger folks aren’t feeling quite so optimistic. Beginning in September 2016, U.S. consumer sentiment as measured by the University of Michigan has climbed year-over-year each month for Americans age 55 and over, growing as much as 19 percent in April from the comparable year-ago period.

Though it has moderated since, sentiment growth for this age bracket still starkly contrasts with that of younger Americans, where growth has been negative for more than a year. Confidence among younger people slipped slightly in the October reading.

Going back decades, consumer surveys have shown Americans in their 20s and 30s more optimistic about the economy compared with their parents and grandparents. What's changed now? One factor in older Americans’ buoyant enthusiasm could be the wealth effect, as stock portfolios and retirement savings have soared.

The Cost of Retiring in New Jersey

Do you have a million dollars saved for retirement? If so, the data research firm HowMuch calculates that will last you 17 years and ten months here in New Jersey. That's eighth from the bottom among the 50 states.

A million dollars will last you the longest in Mississippi, where it would allow you to maintain your lifestyle through 25 years and six months. It would last the shortest in Hawaii, at 13 years and one month.

The figures were based on the cost of living index in each state for the second quarter of 2017, as well as the average annual expenditures of people over 65. The cost of living in New Jersey is among the highest in the nation - it's higher in only six other states.

The Big Test in College Savings

The good news is that an increasing number of families are saving for their kids’ college education. The bad news, according to Fidelity Investments’ latest College Savings IQ survey of almost 2,000 parents nationwide, is that many are likely not saving nearly enough.

A record 72 percent of families have opened college savings accounts, but many families are underestimating the cost of college. Parents of high schoolers, for example, are expecting a four-year nonprofit private college education will cost $145,000 on average. But the projected sticker price is close to $220,000.

Parents saving for college with a 529 plan reported an average balance of $32,000 saved, almost 50 percent more than parents saving without a 529 plan. Parents working with a financial advisor also reported saving more for college than those who didn’t have an advisor — $14,000 more, according to the Fidelity survey.

Workers Are Staying Put

Despite the low unemployment rate, workers are no more likely to leave their jobs than they were two years ago, according to the Labor Department’s new Job Openings and Labor Turnover Survey, or JOLTS. The rate at which workers quit their jobs—seen by many economists as a sign of confidence in the labor market—fell slightly to 2.1 percent in August from 2.2 percent in July.

The quits rate, or the share of employed people who voluntarily leave their jobs in a month, has held nearly steady for two years after slowly climbing following the end of the recession in mid-2009. The sideways move in the quits rate comes at a time when the unemployment rate has fallen to a 16-year low and the number of available jobs has touched the highest level on records back to 2000.

The number of job openings in the U.S. slipped slightly in August from July’s record high, but was the third highest monthly level on record. There were 6.08 million seasonally adjusted openings during the month, down from 6.14 million in July.

Expectations of Inflation

Are consumers and investors starting to believe inflation will rise? A September survey by the Federal Reserve Bank of New York, released yesterday, shows consumers expect annual inflation will be at 2.8 percent three years from now. That's up from 2.6 percent in the previous reading, and is the highest level since April.

Another survey of inflation expectations for the next year, from the University of Michigan, climbed to 2.7 percent last month, from 2.6 percent a month earlier. In the bond market, the differential between nominal and inflation-adjusted Treasury yields, known as breakevens, show expected annual inflation of 1.89 percent over the next 10 years, up from less than 1.7 percent in June.

But this inflation hasn't started up yet. The Fed’s preferred measure of inflation, the personal consumption expenditures price index, was up 1.4 percent from a year earlier in August.