By The Numbers - June 2019Submitted by S. F. Ehrlich Associates, Inc. on July 3rd, 2019
Source: Direxion Funds
June 30, 2019
- THERE HAVE BEEN A DOZEN TUMBLES – During the index’s bull run that started on 3/190/09, the S&P 500 has withstood 12 drops of at least 5%, including 6 drops of at least 10% and 3 drops of at least 15% (source: BTN Research).
- AGING POPULATION – Between 1950 and 2018, the US population doubled from 159.1 million to 332.8 million while the number of Americans at least age 65 quadrupled from 12.8 million to 52.4 million (source: Social Security 2019 Trustees Report).
- MORE YEARS IN RETIREMENT – From 1950 to 2018, the life expectancy of a 65-year-old American male has increased from 12.8 years to 18.1 years, i.e. an increase of 64 months. From 1950 to 2018, the life expectancy of a 65-year-old American female has increased from 15.1 years to 20.6 years, i.e. an increase of 66 months (source: Social Security).
- NOT A PENNY – 23% of working Americans save nothing from their monthly income for their future retirement (source: First National Bank of Omaha 2019 Savings Survey).
- OUT OF BUSINESS - YTD through Friday 5/17/19, approximately 6,400 retail stores have gone out of business and closed across the USA, more than the 5,864 stores that closed nationwide during all of 2018. This year’s closures are on pace to exceed the all-time record of 8,139 store closures in 2017 (source: Coresight Research)
- COLLEGE - During the 2018-19 school year, American colleges awarded 1.88 million bachelor’s degrees, down from a record 1.96 million degrees from the 2016-17 school year (source: Nat’l Ctr. for Education Statistics).
- RECYCLING - Just 15% of plastic is recycled globally, i.e., 85% of plastic ultimately is burned, dumped into a landfill or dropped into the ocean (source: United Nations).
- NEWBORNS - Our nation’s “general fertility rate,” defined as the number of births per 1,000 women between the ages of 15-44, was just 59.0 births in 2018, a record low for birth data that has been tracked nationally since 1909 or for the last 110 years (source: National Center for Health Statistics).
- DECLINING RATE - Of individual tax returns filed in calendar year 2010, 1.11% were audited or 1 out of every 91 returns. Since then, the audit rate has fallen for 7 consecutive years to 0.59% for individual tax returns filed in calendar year 2017, equal to 1 out of every 169 returns (source: IRS Data Book).
- GOTTA START SOMEWHERE - An estimated 40% of this year’s college graduates will be “underemployed” with their first job, i.e., they will take a job for which they are academically overqualified (source: Strada Institute for the Future of Work).
- ARE YOU BETTER ON YOUR OWN? - The average American worker who retires next year (in 2020) will have paid $135,000 in Social Security taxes during his/her working lifetime, less than the $193,000 in Social Security retirement benefits that he/she is projected to receive (source: Urban Institute).
- SIX-TO-ONE RETURN - The average American worker who retires next year (in 2020) will have paid $36,000 in Medicare taxes during his/her working lifetime, far less than the $229,000 in Medicare benefits that he/she is projected to receive. The projected lifetime benefit total is net of Medicare premiums paid by the retiree (source: Urban Institute).
- WHAT A DEAL - The first recipient of a monthly Social Security retirement benefit in January 1940 was 65-year old Ida May Fuller of Vermont. During the 3 years before Fuller retired, she paid $24.75 in payroll taxes (in total, not per year). Fuller lived another 35 years before dying at age 100 in 1975. During her retirement, Social Security paid Fuller $22,889 in retirement benefits, i.e., she received $925 of benefits for every $1 she paid into the program (source: Social Security).
- YOUNG AND OLD - By the year 2035, the number of Americans at least age 65 (projected to be 78.0 million) will exceed the number of Americans under the age of 18 (projected to be 76.4 million), the first time in our nation’s history that has occurred (source: Census Bureau).
- NUMBER THREE – 2019 is the 3rd year of Donald Trump’s 1st 4-year presidential term. The average return for the S&P 500 during the last 23 “presidential 3rd-years” has been a gain of +16.1% (total return), i.e., an average return based upon data going back to 1927. The last time the S&P 500 was negative for a “presidential 3rd-year” was in 1939 or 80 years ago (source: BTN Research).
- CRYSTAL BALL - As of 12/17/18, 10 Wall Street strategists predicted where the yield on the 10-year Treasury note would be as of 12/31/19, i.e., a year down the road. All 10 individuals forecasted an increase in the 10-year note yield during the year from its actual 12/31/18 yield close of 2.68%, with the predictions ranging from a low of 2.75% to a high of 3.6%. Instead of rising however, the rate has fallen YTD in 2019 as the yield on the 10-year note closed at 2.06% last Friday 6/21/19 (source: Barron’s).
- NEGATIVE - The yield on the 10-year German government bond fell to a record low -0.32% on 6/18/19, i.e., a new buyer of that bond is guaranteed to take a loss if he/she holds the bond to maturity (source: Financial Times).
- AT RISK OF A TUMBLE? - The 4 most overvalued housing markets in the world today are Hong Kong, Munich, Toronto and Vancouver (source: UBS Global Real Estate Bubble Index).
- NOT SAVING ENOUGH - The average 65-year old American male has accumulated retirement savings that will sustain him in retirement for 9.7 years, i.e., to just short of his 75th birthday. The problem: the average 65-year old American male has a life expectancy to 83 years, or 8.3 years beyond the point when his savings run out. This study assumed that male retirees would need retirement income of 70% of the individual’s pre-retirement pay (source: World Economic Forum).