Financial Freedom

It’s Just The Facts: February 2021

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  1. START RIGHT AWAY – A child born in February 1999 (22 years ago) who started college in the fall of 2017 is scheduled to graduate from an average 4-year public in-state college in May 2021.  If the child’s parents had invested $146 per month beginning at the child’s 1999 birth and had earned an annualized +8% on all invested dollars, the parents would have been able to pay for their child�s 4-year college expenses of tuition, fees, room and board (the 4-year cost was $86,320).  This calculation ignores the ultimate impact of taxes on the investment account which are due upon withdrawal, is for illustrative purposes only and is not intended to reflect any specific investment or performance.  Actual results will fluctuate with market conditions and will vary (source: College Board).
  2. TOP SHELF – To rank in the top 0.1% of US taxpayers in tax year 2018, i.e., the top 1 out of 1,000 taxpayers, required an adjusted gross income of $2,514,209 (source: Internal Revenue Service).
  3. PEOPLE – The US population reached 200 million in 1967, 300 million in 2006 (39 years later) and was projected in February 2020 to reach 400 million in 2058.  Our population today is 330 million (source: Census Bureau).
  4. NEW HOMES – The construction of 991,100 new single-family homes began in 2020, the 9th consecutive year of increasing home building in the US.  In the decade of the 2010s, 6.8 million new homes began construction, down 44% from the 12.3 million new homes that started in the decade of the 2000s (source: Census Bureau).
  5. OUTLAYS – US consumer spending dropped 3% during calendar year 2020, a combination of spending on “goods” increasing +6% while spending on “services” fell 7% (source: Federal Reserve Bank of New York).
  6. NEGOTIATING WITH THE BANK – As of the end of October 2020, just 3.0 million homeowners with mortgages were in a forbearance plan with their lender, representing 5.6% of all homeowners with mortgages and only 3.6% of all homeowners (source: Black Knight Mortgage Monitor).
  7. THOUGHT IT WOULD BE HIGHER – 522,808 Americans filed bankruptcy in 2020, down 30% from 752,160 bankruptcy filings in 2019 (source: United States Courts, Table F-2, Bankruptcy Filings).
  8. WERE YOU IN ON THIS? – 5.6 million existing homes were sold in 2020, the highest number recorded in the United States since 2006 (source: National Association of Realtors).
  9. JUST ONE OF FIFTY STATES IMPROVED – The unemployment rate in 49 of 50 US states increased between December 2019 and December 2020.  Hawaii had the greatest jobless rate jump (up 6.6 percentage points from 2.7% to 9.3%).  South Dakota was the only state to report a lower jobless rate last year, dropping from 3.4% to 3.0% (source: Bureau of Labor Statistics).
  10. SELLERS’ MARKET – There were 1.07 million existing homes for sale nationwide as of 12/31/20.  Two years ago (12/31/18), there were 1.53 million existing homes for sale nationwide.  Ten years ago (12/31/10), there were 3.02 million existing homes for sale nationwide (source: National Association of Realtors).
  11. AS LONG AS RATES STAY LOW – The average interest rate that the US government pays on its interest-bearing debt as of 12/31/20 was 1.695%, down from 2.331% as of 12/31/15.  That means our government can borrow 37.5% more money today than it borrowed 5 years ago and still have the same out-of-pocket interest expense cost (source: Treasury Department).
  12. COMING BACK? – The number of operating oil rigs in the United States both on land and offshore have increased for 10 consecutive weeks through last Friday 1/29/21.  The current total of 384 operating oil rigs nationwide is 57% higher than the low point of 244 from 8/14/20.  The pandemic forced 60 North American oilfield service companies into bankruptcy (source: Baker Hughes, Haynes and Boone).

Courtesy of Mortgage Market Guide 

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