From the Washington Times:
Their golden years aren’t looking so golden.
A mere 6 percent of the so-called millennial generation think they will receive the same level of Social Security benefits as current retirees, according to a study recently released by the Pew Research Center...
This generation, which entered the job market just as the economy dropped into the Great Recession, could well be the unluckiest.
The already degraded outlook for millennials is made even worse by laws that shift wealth from younger to older generations, as well as the continued failure from Washington to enact the reforms necessary to keep the largest retirement safety-net programs, such as Social Security, solvent for the long term.
The millennial generation is currently between the ages of 18 and 33. According to the Pew study, they are heavily burdened by student debt and have higher levels of unemployment and poverty than the generations that preceded them.
Their income and wealth levels are also lower than was the case for the earlier generations at comparable times.
This lack of economic stability drives the lower marriage rates for millennials — 26 percent compared with 36 percent for Generation X and 48 percent for the baby boomers — at the same point in their lives.
Their coming of age at the start of the Great Recession might haunt many millennials for decades.
Failure to secure a job or ending up underemployed can have long-lasting impact on both income and wealth. It can take decades to make up for lost earnings....
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Link: http://www.washingtontimes.com/news/2014/mar/28/ghei-the-sucker-generation/
Saturday, March 29, 2014
Sunday, March 23, 2014
How the Fed is hurting seniors
From MarketWatch.com:
Seniors, wake up and call Janet Yellen (new Fed chairwoman.)
With an increase in interest rates next year, as Chair Yellen implied in her press conference on Wednesday, she can restore your savings accounts to relevance. The end for low rates might be in sight, and that is good news, despite the initial reaction from markets....
Back in the 1970s or 1980s or 1990s, you might have expected a 5% interest rate or higher on your savings to generate income for your golden years.
Now, it is not even 1%.
Ten years ago, in 2004, the federal funds rate was about 1%. Then, it temporarily climbed to a plateau of about 5.25% between the summers of 2006 and 2007.
However, from the end of 2007 to the beginning of 2009, the rate declined to practically zero and has remained there....
So winners from low rates include those who want to borrow, and those who hold stocks and commodities.
Losers include those who save and lend because they receive less in interest payments from their assets.
This situation disproportionately affects seniors.
According to data from the Census Bureau, seniors ages 65 and over made an average of $3,239 from interest in 2012, and an average of $32,849 in total income.
Thus, just under 10% of their income came from interest.
In contrast, people ages 25 to 64 earned ... (l)ess than 3% of income came from interest for people ages 25 to 64....
----
Link: http://www.marketwatch.com/story/how-the-fed-is-hurting-seniors-2014-03-21
Seniors, wake up and call Janet Yellen (new Fed chairwoman.)
With an increase in interest rates next year, as Chair Yellen implied in her press conference on Wednesday, she can restore your savings accounts to relevance. The end for low rates might be in sight, and that is good news, despite the initial reaction from markets....
Back in the 1970s or 1980s or 1990s, you might have expected a 5% interest rate or higher on your savings to generate income for your golden years.
Now, it is not even 1%.
Ten years ago, in 2004, the federal funds rate was about 1%. Then, it temporarily climbed to a plateau of about 5.25% between the summers of 2006 and 2007.
However, from the end of 2007 to the beginning of 2009, the rate declined to practically zero and has remained there....
So winners from low rates include those who want to borrow, and those who hold stocks and commodities.
Losers include those who save and lend because they receive less in interest payments from their assets.
This situation disproportionately affects seniors.
According to data from the Census Bureau, seniors ages 65 and over made an average of $3,239 from interest in 2012, and an average of $32,849 in total income.
Thus, just under 10% of their income came from interest.
In contrast, people ages 25 to 64 earned ... (l)ess than 3% of income came from interest for people ages 25 to 64....
----
Link: http://www.marketwatch.com/story/how-the-fed-is-hurting-seniors-2014-03-21
Saturday, March 15, 2014
How to Become a (Public Pension) Millionaire
From the Wall Street Journal online:
...across the country the costs of maintaining pensions for city and state employees more than doubled to nearly $84 billion in 2011 from 2002.
Yet the American Federation of State, County and Municipal Employees (Afscme) declares that public pensions are "modest," noting that its average member "receives a pension of approximately $19,000 per year after a career of public service."
The facts don't agree.
Data compiled from all state pensions show that, for employees who spend a career in state government, generous pensions put retired public workers among the highest earners in their state.
It is true that average public-pension benefits rarely seem extravagant. But these averages are reduced by two groups: older employees who retired many years ago and whose benefits are far less than those of an employee retiring today; and by short-term workers who often receive tiny pensions but almost surely have retirement savings from another job.
A far more relevant measure of the public-pension burden is how much a typical full-career state employee retiring today receives....
Unions claim that no one works for government to get rich, but many public employees become "pension millionaires" along the way.
In Nevada, an average full-career state worker can expect to receive $1.3 million in lifetime pension benefits. Alaska, California, Colorado and Oregon all pay lifetime benefits exceeding $1.2 million.
A wealthy, high-cost-of-living state such as Connecticut offers more than $1 million in average lifetime benefits to full-career employees who retire today; so does a relatively low-cost state such as West Virginia...
----
Link: http://online.wsj.com/news/articles/SB10001424052702304360704579415173512940990?
...across the country the costs of maintaining pensions for city and state employees more than doubled to nearly $84 billion in 2011 from 2002.
Yet the American Federation of State, County and Municipal Employees (Afscme) declares that public pensions are "modest," noting that its average member "receives a pension of approximately $19,000 per year after a career of public service."
The facts don't agree.
Data compiled from all state pensions show that, for employees who spend a career in state government, generous pensions put retired public workers among the highest earners in their state.
It is true that average public-pension benefits rarely seem extravagant. But these averages are reduced by two groups: older employees who retired many years ago and whose benefits are far less than those of an employee retiring today; and by short-term workers who often receive tiny pensions but almost surely have retirement savings from another job.
A far more relevant measure of the public-pension burden is how much a typical full-career state employee retiring today receives....
Unions claim that no one works for government to get rich, but many public employees become "pension millionaires" along the way.
In Nevada, an average full-career state worker can expect to receive $1.3 million in lifetime pension benefits. Alaska, California, Colorado and Oregon all pay lifetime benefits exceeding $1.2 million.
A wealthy, high-cost-of-living state such as Connecticut offers more than $1 million in average lifetime benefits to full-career employees who retire today; so does a relatively low-cost state such as West Virginia...
----
Link: http://online.wsj.com/news/articles/SB10001424052702304360704579415173512940990?
Thursday, March 13, 2014
Global Debt Exceeds $100 Trillion as Governments Binge
From Bloomberg.com:
The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates, according to the Bank for International Settlements.
The $30 trillion increase from $70 trillion between mid-2007 and mid-2013 compares with a $3.86 trillion decline in the value of equities to $53.8 trillion in the same period, according to data compiled by Bloomberg...
Borrowing has soared as central banks suppress benchmark interest rates to spur growth after the U.S. subprime mortgage market collapsed and Lehman Brothers Holdings Inc.’s bankruptcy sent the world into its worst financial crisis since the Great Depression.
Yields on all types of bonds, from governments to corporates and mortgages, average about 2 percent, down from more than 4.8 percent in 2007, according to the Bank of America Merrill Lynch Global Broad Market Index....
----
Link: www.bloomberg.com/news/2014-03-09/global-debt-exceeds-100-trillion-as-governments-binge-bis-says.html
The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates, according to the Bank for International Settlements.
The $30 trillion increase from $70 trillion between mid-2007 and mid-2013 compares with a $3.86 trillion decline in the value of equities to $53.8 trillion in the same period, according to data compiled by Bloomberg...
Borrowing has soared as central banks suppress benchmark interest rates to spur growth after the U.S. subprime mortgage market collapsed and Lehman Brothers Holdings Inc.’s bankruptcy sent the world into its worst financial crisis since the Great Depression.
Yields on all types of bonds, from governments to corporates and mortgages, average about 2 percent, down from more than 4.8 percent in 2007, according to the Bank of America Merrill Lynch Global Broad Market Index....
----
Link: www.bloomberg.com/news/2014-03-09/global-debt-exceeds-100-trillion-as-governments-binge-bis-says.html
Sunday, March 9, 2014
We Can't Escape Our 'Groundhog Day' Recovery
From theatlantic.com:
The past five years have been a Groundhog Day recovery.
Every day, we wake up hoping that this will be the day that the economy finally picks up.
And every day, we wake up tohear Sonny and Cher playing find out that it hasn't.
Jobs growth just keeps chugging along at 2 percent pretty much no matter what.
----
Link: http://www.theatlantic.com/business/archive/2014/03/we-cant-escape-our-groundhog-day-recovery/284301/
The past five years have been a Groundhog Day recovery.
Every day, we wake up hoping that this will be the day that the economy finally picks up.
And every day, we wake up to
Jobs growth just keeps chugging along at 2 percent pretty much no matter what.
----
Link: http://www.theatlantic.com/business/archive/2014/03/we-cant-escape-our-groundhog-day-recovery/284301/
Saturday, March 8, 2014
Our next Big Crisis: Retirement
From Marketwatch.com:
Many people are also in terrible financial shape for their retirement.
The Boston College Center for Retirement Research has just updated its “National Retirement Risk Index,” a measure of just how many people can expect to be financially comfortable in retirement.
It doesn’t make for happy reading.
According to Boston College, based on current projections, about half the country is at risk of being unable to maintain their standard of living in retirement.
Among low-income workers that rises to 60%. But it’s 40% even among the higher-income workers.
The picture has improved a bit since 2010, of course, as the economy has recovered somewhat from the financial crisis. But it remains worse than it was in 2007.
One of the stark issues that comes out of the report is how little the stock market boom has helped.
As the Boston College researchers note, citing data from the Federal Reserve’s 2010 Survey of Consumer Finances, most people don’t own many stocks. Equities account for just 17% of the wealth of high earners, 6% of middle earners and 2% of low earners.
Far more important is the value of housing — which has recovered much less dramatically than the stock market....
----
Link: http://www.marketwatch.com/story/our-next-big-crisis-will-be-a-retirement-crisis-2014-03-03
Many people are also in terrible financial shape for their retirement.
The Boston College Center for Retirement Research has just updated its “National Retirement Risk Index,” a measure of just how many people can expect to be financially comfortable in retirement.
It doesn’t make for happy reading.
According to Boston College, based on current projections, about half the country is at risk of being unable to maintain their standard of living in retirement.
Among low-income workers that rises to 60%. But it’s 40% even among the higher-income workers.
The picture has improved a bit since 2010, of course, as the economy has recovered somewhat from the financial crisis. But it remains worse than it was in 2007.
One of the stark issues that comes out of the report is how little the stock market boom has helped.
As the Boston College researchers note, citing data from the Federal Reserve’s 2010 Survey of Consumer Finances, most people don’t own many stocks. Equities account for just 17% of the wealth of high earners, 6% of middle earners and 2% of low earners.
Far more important is the value of housing — which has recovered much less dramatically than the stock market....
----
Link: http://www.marketwatch.com/story/our-next-big-crisis-will-be-a-retirement-crisis-2014-03-03
Monday, March 3, 2014
Fight Inequality With Better Jobs
Mort Zuckerman, the most accurate analyst of the joblessness disaster, writing in the Wall Street Journal:
...the fundamental economic issue facing America... is jobs—their scarcity and the quality of those that people manage to find.
The unemployment rate is about 13% if you take into account people "marginally attached" to the workforce. The Bureau of Labor Statistics reports that at the end of 2013 there were about 27.3 million part-time jobs, making up about 18% of the workforce.
Youth unemployment is a stunning 14%. It is particularly distressing that the labor participation rate has hit a 35-year low of 63.2%.
This rate has dropped most noticeably for men and women in their prime earning years between the ages of 25 and 54 and is up only slightly for those 55 and over.
No wonder recovery is a dirty word to millions of Americans who continue to experience hardship five years after the Great Recession of 2008-09. On Friday, the Commerce Department announced that fourth-quarter economic growth for 2013 was even lower than predicted, coming in at a desultory 2.4%.
That is bad news for Americans who need work.
Job losses in the low-wage and minimum-wage category is the critical issue of our day: Too many of the poor are not working full time or at all.
Income inequality isn't so much the problem as income inadequacy. A more robust economy, stoked by growth-oriented policies from Washington, would help produce the jobs and opportunities that millions of Americans need to climb the economic ladder....
----
Link: http://online.wsj.com/news/articles/SB10001424052702303426304579403711603102886?
...the fundamental economic issue facing America... is jobs—their scarcity and the quality of those that people manage to find.
The unemployment rate is about 13% if you take into account people "marginally attached" to the workforce. The Bureau of Labor Statistics reports that at the end of 2013 there were about 27.3 million part-time jobs, making up about 18% of the workforce.
Youth unemployment is a stunning 14%. It is particularly distressing that the labor participation rate has hit a 35-year low of 63.2%.
This rate has dropped most noticeably for men and women in their prime earning years between the ages of 25 and 54 and is up only slightly for those 55 and over.
No wonder recovery is a dirty word to millions of Americans who continue to experience hardship five years after the Great Recession of 2008-09. On Friday, the Commerce Department announced that fourth-quarter economic growth for 2013 was even lower than predicted, coming in at a desultory 2.4%.
That is bad news for Americans who need work.
Job losses in the low-wage and minimum-wage category is the critical issue of our day: Too many of the poor are not working full time or at all.
Income inequality isn't so much the problem as income inadequacy. A more robust economy, stoked by growth-oriented policies from Washington, would help produce the jobs and opportunities that millions of Americans need to climb the economic ladder....
----
Link: http://online.wsj.com/news/articles/SB10001424052702303426304579403711603102886?
Sunday, March 2, 2014
Putin Smashes Washington’s Cocoon
From Walter Russell Mead at the American Interest:
Headlines like “Why Russia Won’t Invade Ukraine,” “No, Russia Will Not Intervene in Ukraine,” and “5 Reasons for Everyone to Calm Down About Crimea” weren’t hard to find in our most eminent publications.
... this massive intellectual breakdown has a lot to do with a common American mindset that is especially built into our intellectual and chattering classes.
Well educated, successful and reasonably liberal minded Americans find it very hard to believe that other people actually see the world in different ways...
How many times did foolishly confident American experts and officials come out with some variant of the phrase “We all share a common interest in a stable and prosperous Ukraine.” We may think that’s true, but Putin doesn’t.
We blame this in part on the absence of true intellectual and ideological diversity in so much of the academy, the policy world and the mainstream media.
Most college kids at good schools today know many more people from different races and cultural groups than their grandparents did, but they are much less exposed to people who think outside the left-liberal box.
How many faithful New York Times readers have no idea what American conservatives think, much less how Russian oligarchs do?
Well bred and well read Americans live in an ideological and cultural cocoon and this makes them fatally slow to understand the very different motivations that animate actors ranging from the Tea Party to the Kremlin to, dare we say it, the Supreme Leader and Guide of the Islamic Republic of Iran....
----
Link: http://www.the-american-interest.com/blog/2014/03/01/putin-smashes-washingtons-cocoon/
Headlines like “Why Russia Won’t Invade Ukraine,” “No, Russia Will Not Intervene in Ukraine,” and “5 Reasons for Everyone to Calm Down About Crimea” weren’t hard to find in our most eminent publications.
... this massive intellectual breakdown has a lot to do with a common American mindset that is especially built into our intellectual and chattering classes.
Well educated, successful and reasonably liberal minded Americans find it very hard to believe that other people actually see the world in different ways...
How many times did foolishly confident American experts and officials come out with some variant of the phrase “We all share a common interest in a stable and prosperous Ukraine.” We may think that’s true, but Putin doesn’t.
We blame this in part on the absence of true intellectual and ideological diversity in so much of the academy, the policy world and the mainstream media.
Most college kids at good schools today know many more people from different races and cultural groups than their grandparents did, but they are much less exposed to people who think outside the left-liberal box.
How many faithful New York Times readers have no idea what American conservatives think, much less how Russian oligarchs do?
Well bred and well read Americans live in an ideological and cultural cocoon and this makes them fatally slow to understand the very different motivations that animate actors ranging from the Tea Party to the Kremlin to, dare we say it, the Supreme Leader and Guide of the Islamic Republic of Iran....
----
Link: http://www.the-american-interest.com/blog/2014/03/01/putin-smashes-washingtons-cocoon/
Housing recovery still going strong?
From CNBC.com:
Mortgage applications to buy a home fell last week to the lowest level in nearly two decades, according to a weekly survey from the Mortgage Bankers Association.
The report is a clear sign of weakness in buyer demand heading into the usually busy spring housing season.
"Purchase applications were little changed on an unadjusted basis last week, but this is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it," said Mike Fratantoni, the association's chief economist.
Total application volume fell 8.5 percent on a seasonally adjusted basis from a week earlier, while the Refinance Index was down 11 percent from the previous week.
The seasonally adjusted Purchase Index decreased 4 percent from one week earlier, to the lowest level since 1995...
----
Link: http://www.cnbc.com/id/101446044
Mortgage applications to buy a home fell last week to the lowest level in nearly two decades, according to a weekly survey from the Mortgage Bankers Association.
The report is a clear sign of weakness in buyer demand heading into the usually busy spring housing season.
"Purchase applications were little changed on an unadjusted basis last week, but this is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it," said Mike Fratantoni, the association's chief economist.
Total application volume fell 8.5 percent on a seasonally adjusted basis from a week earlier, while the Refinance Index was down 11 percent from the previous week.
The seasonally adjusted Purchase Index decreased 4 percent from one week earlier, to the lowest level since 1995...
----
Link: http://www.cnbc.com/id/101446044
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