October 17, 2016

The 246,000 Americans that filed for first-time unemployment benefits for the week ending 10/08/16 were the fewest to do so in any week since 11/24/73 or 43 years ago.  During the 2009 global real estate crisis, first-time weekly unemployment claims reached as high as 665,000 in late March 2009 and then did not drop below 500,000 new claims in any one week until Thanksgiving later that year.  Traditionally, lower first-time claims occur in concert with a stable national unemployment rate (source: Department of Labor).

The final fiscal year 2016 numbers for our country’s finances were released late in the day (4pm ET) last Friday afternoon (10/14/16).  For the 12 month period that just ended 9/30/16, the USA had a $587 billion budget deficit, the difference between $3.3 trillion of tax receipts and $3.9 trillion of outlays.  Also during fiscal year 2016, the United States increased its national debt by $1.423 trillion to a record total of $19.573 trillion.  Sadly, both numbers have received little national attention, even during the current political season (source: Treasury Department).

The Tax Reform Act of 1986 was enacted on 10/22/86, i.e., 30 years ago this week.  The legislation, signed into law by former President Ronald Reagan, was the last time the US tax code underwent major simplification.  The number of tax brackets was reduced from 15 to 3.  The top marginal rate was lowered from 50% to 28% while the lowest marginal rate was increased from 0% to 15% (source: Tax Reform Act of 1986).

LOOKING INTO THE FUTURE – 8 of 10 Wall Street equity strategists polled by Barron’s on 12/12/15 forecasted a year-end 2016 closing value for the S&P 500 between 2100 and 2200.  The S&P 500 index closed last Friday (10/14/16) at 2133 (source: Barron’s).

GROWING – The US economy has been growing for the last 87 months (i.e., no recession), an expansion exceeded in length only 3 times since 1900 (source: National Bureau of Economic Research).

A CHANCE TO START OVER – After peaking at 1.562 million in 2010, personal bankruptcies (either Chapter 7 or Chapter 13) are on pace to decline on a year-over-year basis for the 6th consecutive year in 2016.  Through 9/30/16, just 593,000 Americans have filed for bankruptcy protection YTD (source: American Bankruptcy Institute).

NOT COMPLETELY ON OUR OWN – 24% of the petroleum consumed by the United States in 2015 (including crude oil, gasoline and diesel fuel) was imported from foreign countries.  The 24% was the lowest import percentage since 1970 (source: Energy Information Administration).