Patience, Says the Fed

The Federal Open Market Committee released minutes from its two-day January meeting on Wednesday. In the minutes, the Fed laid out more detail as to why it decided to be patient with monetary policy, and it looks like more rate hikes are off the table for the time being.

Following four rate hikes in 2018, the Fed announced last month that it would hit the pause button and keep its benchmark Fed funds rates steady at the 2.25 percent to 2.5 percent target range. But it was unclear how long the central bank planned on doing so.

Now we know a bit more detail. The FOMC meeting minutes included 13 mentions of the word “patient,” saying there were a “variety of considerations that supported a patient approach.” Furthermore, “a patient posture would allow time for a clearer picture of the international trade policy situation and the state of the global economy to emerge and, in particular, could allow policymakers to reach a firmer judgment about the extent and persistence of the economic slowdown in Europe and China.”

Confidence in Retirement

Are you increasingly confident about your retirement? More Americans are these days. The University of Michigan's "Change in the Likelihood of a Comfortable Retirement Compared with Five Years Ago" hit a level of 109 in February. The index hadn't been at that level since January 2001.

Supporting that positive outlook, a recent Fidelity Investments survey of more than 3,100 households showed that the typical saver is on track to have 80 percent of the income the financial services company estimates older Americans will need to cover expenses in retirement. The average 401(k) account at Fidelity hit $104,300 during the fourth quarter of 2017.

The median savings rate in a retirement plan is now 8.8 percent of pay, up from 3.6 percent in 2006, according to Fidelity. However, that is still far below Fidelity's suggested savings rate of 15 percent of salary, including employer matches.

An Incredible Six Weeks

The year-to-date gain for the S&P 500 eclipsed 10 percent on Friday. That is already better than what the index typically sees over an entire year, and it's the best start to a year for the market in 32 years.

The gains have been remarkably broad-based. Through the first month and a half of 2019, all the sectors in the S&P 500 are in positive territory. In fact, none of them are even close to negative. The worst performing sector has been the utilities, and even they are up 4.7 percent so far.

On the other hand, industrials are up 17.3 percent, energy is up 14.6 percent, and real estate is up 12.7 percent. That's a remarkable performance for about six weeks' worth of trading.

Thoughts for Presidents' Day

“99 percent of failures come from people who make excuses.” ~ George Washington

"He was reluctant to accept office. Nothing would have pleased him more than to remain in equable but active retirement at Mount Vernon, improving the husbandry of his estate. But, as always, he answered the summons of duty." ~ Winston Churchill

“I am not bound to win, but I am bound to be true. I am not bound to succeed, but I am bound to live up to what light I have.” ~ Abraham Lincoln

"Mr. Lincoln was not only a great President, but a great man — too great to be small in anything." ~ Frederick Douglass

Retail Falls in December

U.S. retail sales recorded their biggest drop in more than nine years in December as receipts fell across the board, the Commerce Department said yesterday. (The release of the December figures was delayed by the government shutdown.) Retail sales tumbled 1.2 percent, the largest decline since September 2009, when the economy was still in the depths of the recession.

Even more surprising, sales at internet sellers tumbled 3.9 percent, marking their worst performance since November 2008, in the midst of the financial crisis. Those sales had increased 2.8 percent in November. Receipts at service stations dropped by 5.1 percent, the biggest fall since February 2016, reflecting cheaper gasoline prices.

In other categories, receipts at restaurants and bars fell 0.7 percent. Spending at hobby, musical instrument and book stores fell by 4.9 percent, the biggest drop since September 2008.

For Love or Money

Happy Valentine’s Day! Do people look more for love or for money in their romantic relationships? Merrill Edge recently conducted a survey on that very question, and found that 56 percent of Americans say they want a partner who provides financial security more than “head over heels” love (44 percent).

This sentiment is held in almost equal measure by both men and women (54 percent and 57 percent). Only the youngest group,  those born between 1996 and 2010, chose love (54 percent) over money.

One other finding: Wealthier couples don’t necessarily last longer than those who earn less. Indeed, the more you spend on a wedding ceremony, the shorter the marriage: Couples who spend $20,000 on their wedding are 46 percent more likely than average to get divorced; that risk falls to 29 percent higher than average for those who spend $10,000 to $20,000.

Completely Back from the Recession

Americans' optimism about their personal finances has climbed to levels not seen in more than 16 years, with 69 percent now saying they expect to be financially better off "at this time next year," according to a new Gallup survey. That's only two percentage points below the all-time high of 71 percent, recorded in March 1998.

Ten years ago, as the Great Recession neared its end, the percentage saying their finances had improved from the previous year was at a record low of 23 percent. More than half the public, 54 percent, said they were worse off. Now, the number saying they are worse off than a year ago has dropped to 26 percent, the lowest level since October 2000.

Fifty percent say they are better off today than they were a year ago. That 50 percent represents a post-recession milestone - the first time since 2007 that at least half of the public has said they are financially better off than a year ago.