The U.S. grew economy grew a touch softer in the first quarter than originally reported, mainly because of a slower buildup in inventories, the Commerce Department said yesterday. Gross domestic product was trimmed to an annual 2.2 percent pace from the previously reported 2.3 percent.
What happened to change it? There were some positive changes to the first-quarter GDP number: Fixed investment in things like equipment, structures and software was revised higher show a 6.5 percent increase instead of 4.6 percent.
Yet stronger investment was offset by weaker inventory growth. The value of newly added inventories was slashed to $20.2 billion from an originally reported $33.1 billion. The increase in consumer spending was lowered a notch to 1 percent from 1.1 percent. On top of that, exports rose a bit slower at 4.2 percent vs. a preliminary 4.8 percent.
Thursday, May 31, 2018
Wednesday, May 30, 2018
Billions for Women
The world's billionaire population increased by 15 percent to 2,754 individuals last year, surpassing the previous peak of 2,473 in 2015, according to Wealth-X, a wealth information and insight business. But maybe the biggest news is the rise of female billionaires.
Last year, the number of female billionaires rose by 18 percent to 321, outpacing the 14.5 percent growth in the male billionaire population. That increased women’s share of the global billionaire population to 11.7 percent.
In addition, Wealth-X noted a steady increase in the number of female billionaires whose net worth can be attributed to both inheritance and self-made wealth creation. According to the census, 56.8 percent of global billionaires are self-made, 13.2 percent inherited their wealth and 30 percent built their fortunes in part on inherited wealth.
Last year, the number of female billionaires rose by 18 percent to 321, outpacing the 14.5 percent growth in the male billionaire population. That increased women’s share of the global billionaire population to 11.7 percent.
In addition, Wealth-X noted a steady increase in the number of female billionaires whose net worth can be attributed to both inheritance and self-made wealth creation. According to the census, 56.8 percent of global billionaires are self-made, 13.2 percent inherited their wealth and 30 percent built their fortunes in part on inherited wealth.
Tuesday, May 29, 2018
Retirement Accounts Are Growing
As of the end of the first quarter, the average retirement account balance for workers with both a Fidelity IRA and a Fidelity workplace retirement account, such as a 401(k) or 403(b), is up by 9 percent from the end of the first quarter of 2017. That average balance now stands at $299,600, up substantially from the average balance of $275,700 at the end of the first quarter of 2017.
In addition, 401(k) contribution rates are on the rise, with the total savings rate (including not just employee contributions but also employer matches) hitting a record high of 13.2 percent at the end of the first quarter. That’s up from 13.0 percent in the fourth quarter 2017.
Interestingly, IRA account averages are consistently higher than either 401(k) balances or 403(b) balances at Fidelity. For the first quarter of 2018, Fidelity reported that its average IRA balance stood $105,100; its average 401(k) balance was at $102,900; and its average 403(b) balance was $82,100.
In addition, 401(k) contribution rates are on the rise, with the total savings rate (including not just employee contributions but also employer matches) hitting a record high of 13.2 percent at the end of the first quarter. That’s up from 13.0 percent in the fourth quarter 2017.
Interestingly, IRA account averages are consistently higher than either 401(k) balances or 403(b) balances at Fidelity. For the first quarter of 2018, Fidelity reported that its average IRA balance stood $105,100; its average 401(k) balance was at $102,900; and its average 403(b) balance was $82,100.
Monday, May 28, 2018
Thoughts for Memorial Day
“Honor to the soldier and sailor everywhere, who bravely bears his country’s cause. Honor, also, to the citizen who cares for his brother in the field and serves, as he best can, the same cause." ~Abraham Lincoln
“Heroes may not be braver than anyone else. They’re just braver five minutes longer." ~Ronald Reagan
"Of all the so-called natural human rights that have ever been invented, liberty is least likely to be cheap and is never free of cost." ~Robert A. Heinlein
“Heroes may not be braver than anyone else. They’re just braver five minutes longer." ~Ronald Reagan
"Of all the so-called natural human rights that have ever been invented, liberty is least likely to be cheap and is never free of cost." ~Robert A. Heinlein
Friday, May 25, 2018
The Good News on Student Loans
In this season of graduation, many of us are thinking about student loans. The news in that area is fairly good: The share of new delinquencies on student loans has fallen to its lowest level in more than decade. In the first quarter, slightly over 9 percent of student debt outstanding was newly delinquent, based on figures from the Federal Reserve Bank of New York.
In the first quarter, 10.7 percent of overall student-loan debt was considered delinquent, meaning a payment hadn’t been made on the debt in at least 90 days. This figure marked the smallest share of student-loan borrowers in serious delinquency since 2012.
During the recession, delinquencies across categories of debt--including auto loans and credit-card debt--spiked. Around 2011, debt delinquencies reversed course, except for student-loan delinquencies, which rose through 2012 and remained at an elevated level for several years. The student-loan delinquency rate is still far higher than rates for any other type of consumer debt.
In the first quarter, 10.7 percent of overall student-loan debt was considered delinquent, meaning a payment hadn’t been made on the debt in at least 90 days. This figure marked the smallest share of student-loan borrowers in serious delinquency since 2012.
During the recession, delinquencies across categories of debt--including auto loans and credit-card debt--spiked. Around 2011, debt delinquencies reversed course, except for student-loan delinquencies, which rose through 2012 and remained at an elevated level for several years. The student-loan delinquency rate is still far higher than rates for any other type of consumer debt.
Thursday, May 24, 2018
Another Rate Hike Seems Likely
Federal Reserve officials in their meeting in early May confirmed they planned to raise interest rates in June and were not concerned they were behind the curve on inflation. That was the primary takeaway from that meeting, whose minutes were released to the public yesterday afternoon.
“Most participants judged that if incoming information broadly confirmed their economic outlook, it would likely soon be appropriate for the FOMC to take another step in removing policy accommodation,” the minutes said. Traders in the federal funds futures market see more than a 90 percent chance of a June rate hike.
Although inflation hit the Fed’s 2 percent target in the latest reading for March, for the first time in a year, officials were not convinced it would remain there for long. “It was noted that it was premature to conclude that inflation would remain at levels around 2 percent, especially after several years in which inflation had persistently run below the Fed’s 2 percent objective,” the minutes said. Only a “few” officials thought inflation might move “slightly” above the 2 percent target.
“Most participants judged that if incoming information broadly confirmed their economic outlook, it would likely soon be appropriate for the FOMC to take another step in removing policy accommodation,” the minutes said. Traders in the federal funds futures market see more than a 90 percent chance of a June rate hike.
Although inflation hit the Fed’s 2 percent target in the latest reading for March, for the first time in a year, officials were not convinced it would remain there for long. “It was noted that it was premature to conclude that inflation would remain at levels around 2 percent, especially after several years in which inflation had persistently run below the Fed’s 2 percent objective,” the minutes said. Only a “few” officials thought inflation might move “slightly” above the 2 percent target.
Wednesday, May 23, 2018
A Big Quarter for Banks
Bank profits soared by 28 percent during the first quarter of 2018 to $56 billion, according to statistics published this week by the FDIC. The blockbuster earnings report easily tops the prior record set just three quarters earlier.
The FDIC said that 70 percent of the nation's 5,606 banks grew their bottom line during the last quarter. The percentage of money-losing banks dropped to just 3.9 percent. The FDIC's list of problem banks fell to just 92, the lowest that figure has been since the first quarter of 2008.
The financial industry owes a chunk of the mega earnings to the corporate tax cut passed at the end of last year. The FDIC said the tax law boosted bank profits by about $6.7 billion. However, banks would have still made a record $49.4 billion without the tax cuts.
The FDIC said that 70 percent of the nation's 5,606 banks grew their bottom line during the last quarter. The percentage of money-losing banks dropped to just 3.9 percent. The FDIC's list of problem banks fell to just 92, the lowest that figure has been since the first quarter of 2008.
The financial industry owes a chunk of the mega earnings to the corporate tax cut passed at the end of last year. The FDIC said the tax law boosted bank profits by about $6.7 billion. However, banks would have still made a record $49.4 billion without the tax cuts.
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