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January 22, 2018

Our nation’s 13th government shutdown since 1980 and first since October 2013 began at midnight last Friday (1/19/18) when Washington lawmakers failed to agree on a compromise regarding fiscal year 2018 spending levels.  Republicans wanted to pass a short-term (4 weeks) “continuing funding resolution,” delaying for the 4th time since 9/30/17 decisions on government spending, e.g., military, infrastructure and health care.  Democrats were trying to leverage the spending negotiations (i.e., a three-fifths majority was needed to pass any further delays) to force an immediate agreement on immigration.  Of the previous 12 shutdowns, the first 9 lasted 3 days or less.  Only the 10th (5 days), the 11th (21 days) and the 12th (16 days) were longer (source: Congress).

The yield on the 10-year Treasury note closed at 2.64% last week, its highest close since 6/17/14 or more than 3 ½ years ago.  In just 3 weeks of 2018, the yield on the 10-year note has increased by 0.23 percentage points, larger than the absolute change in calendar year 2015 (0.10 percentage points), 2016 (0.17 percentage points) or 2017 (0.03 percentage points).  The yield on the 10-year note is the key domestic benchmark for loans and mortgages nationwide (source: Treasury Department).

President Trump signed the “Tax Cuts and Jobs Act” into law one month ago today (12/22/17).  As new withholding tables become effective, Americans will see larger take home pay.  For tax year 2015 (the latest year that tax data has been released), it took $480,930 of adjusted gross income (AGI) to rank in the top 1% of American taxpayers and $138,031 of AGI to rank in the top 10% (source: Tax Foundation).

Notable Numbers

ONE YEAR – The S&P 500 gained +26.2% (total return) during the 1st year of the Trump administration, i.e., the 12 months from President Trump’s 1/20/17 inauguration through 1/20/18 (source: BTN Research).

LESS THAN FIVE PERCENT – The US population was 327 million as of 1/01/18, 4.4% of the world’s population (7.44 billion) as of that date (source: Census Bureau).

ABOUT THE SAME – The average price of gasoline nationwide was $2.54 a gallon as of Sunday 1/21/18.  The average price of gasoline nationwide in 1968 (i.e., 50 years ago) was 34 cents.  After adjusting for 50 years of inflation, the 34 cent price in 1968 is equivalent to $2.47 in 2018 dollars (source: AAA).

AT LEAST SIXTY – The price of crude oil has closed above $60 a barrel each trading day in 2018, finishing last Friday 1/19/18 at $63.37 a barrel.  Before the last trading day of 2017 (Friday 12/29/17) when oil closed at $60.12 a barrel, the last time oil had closed above $60 a barrel was 6/24/15 (source: NYMEX).

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