November 29, 2021
The White House announced its plan to release 50 million barrels of crude oil from its underground reserve (aka the “Strategic Petroleum Reserve”) between late December through April 2022. The proposal, done in concert with similar action from 5 other countries (China, India, Japan, South Korea and the UK), is designed to bring down high energy prices. In July 2021, the OPEC+ nations announced its own plan to gradually increase oil production, starting with a 400,000 barrels per day addition in each of the last 5 months of this year. The 50 million barrels to be pulled from the SPR represents less than 3 days consumption in America. Our 2020 consumption of 6.66 billion barrels is equal to 18.2 million barrels per day (source: Department of Energy).
Housing activity continues it remarkable pandemic-era performance. The average sale price of a new home sold in the United States in October 2021 was $477,800, the highest average ever recorded, both on a nominal basis and on an inflation adjusted basis (source: Census Bureau).
The problems that plagued the US banking industry during the national mortgage crisis a dozen years ago are fading away in our nation’s financial rearview mirror. As of 10/01/21, the 5 largest US banks have “capital requirements” ranging from 7.0% to 11.2% of assets. The exact percentage for any individual bank is the sum of a 4.5% minimum capital requirement, a “stress test capital buffer requirement” of at least 2.5%, and a “surcharge for global systemically important banks” (source: Federal Reserve).
Notable Numbers
WHO BENEFITS? – The House version of HR # 5376 (aka “Build Back Better” Act) that is now in the Senate raises the “state and local tax” (SALT) cap from $10,000 to $80,000. An estimated 70% of the tax benefit of the increase to $80,000 would be used by individuals in the top 5% of US taxpayers, i.e., taxpayers with annual incomes of $365,000 or more (source: Tax Policy Center).
NICE NEIGHBORHOOD – The costliest zip code in the USA is 94027 (Atherton, CA) where the median sales price of a single-family home in 2021 was $7.475 million (source: Architectural Digest).
TARNISHED STATE – 52% of Californians surveyed in October 2021 view the state’s economic outlook over the next 12 months to be negative, expecting “bad times” ahead (source: Public Policy Institute of California).
HUGE, BUT SLOWING DOWN – Student loan debt nationwide was $1.58 trillion as of 9/30/21, but the total has increased just +1.9% over the last 12 months. Over the last 5 years, i.e., 9/30/16 to 9/30/21, student loan debt has increased +23.5% (from $1.279 trillion to $1.58 trillion), an average increase of +4.3% per year (source: Federal Reserve Bank of New York).
