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September 19, 2016

When the Federal Reserve raised short-term interest rates on 12/16/15 for the first time in 9 ½ years, Janet Yellen’s post-meeting press conference included a forecast of 4 rate hikes during 2016 that would result in a one percentage point increase, i.e., 4 hikes spread over 8 scheduled meetings of ¼ of 1 percentage point each.  Through the first 5 meetings of 2016, the Fed has not raised rates.  Meeting # 6 of 2016 will take place this week.  The debt market was priced to reflect just a 15% chance of a rate hike at this week’s 2-day meeting when bond trading closed last Friday night (source: Federal Reserve).

From the end of 2006 to the end of 2008, the total net worth of Americans dropped a remarkable $10.5 trillion, bottoming at $55.8 trillion as of 12/31/08.  But from that low point in the middle of the global housing crisis, assets have climbed and liabilities have been pared back, resulting in a +60% increase in the net worth of US households in the last 7 ½ years to a record $89.1 trillion (source: Federal Reserve).

The government reported last week a record increase of +5.2% in household median income (i.e., 2015 over 2014), the largest year-over-year bump in a statistic tracked since 1967.  Ironically, 2015’s level ($56,516) is still less than the inflation-adjusted $57,909 that was recorded in 1999.  The calculations behind this statistic involve a substantial amount of extrapolation: just 95,000 US households are surveyed, a mere 0.08% of our nation’s 118.3 million households (source: Census Bureau).

Notable Numbers

HAVING BABIES – The birth rate in the United States is 13.42, i.e., 13.42 births per 1,000 citizens.  The birth rate in Mexico is 19.02, i.e., 19.02 births per 1,000 citizens, or +42% higher than that of the United States (source: CIA World Factbook).

TAX DATA – The 6.22 million tax returns from 2014 that reported at least $200,000 of adjusted gross income (AGI) represent 4.2% of all returns filed, received 34.2% of all AGI nationwide and paid 58.2% of all the federal income tax that was paid nationally in 2014 (source: Internal Revenue Service).

MORE THAN TEN BILLION A DAY – With less than 2 weeks remaining in fiscal year 2016 (i.e., the 12 months that will end on 9/30/16), the government is projecting fiscal year spending of $3.88 trillion, equal to $10.6 billion of daily outlays (source: Treasury Department).

COST OF DOING BUSINESS – Based upon June 2016 data, 69% of the total employee cost that an employer pays in the private sector is for wages and salaries.  The other 31% is for the various benefits that are legally required (e.g., Social Security) or are simply provided to attract and retain workers including insurance, retirement plans and paid leave (source: Department of Labor).

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