Brower Financial Group Articles

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Be sure to study your potential Medicare choices in the years before you turn 65. Evaluate whether you should go with original Medicare (and Part D coverage) or a Part C plan.

POSITIVES & NEGATIVES IN JANUARY’s JOB DATA

The Department of Labor’s latest jobs report showed 227,000 net new hires last month. Unfortunately, wages grew just 0.1% in January as the headline jobless rate rose slightly to 4.8%. The U-6 rate, counting the underemployed, rose 0.2% to 9.4%.¹

STRONG CONSUMER CONFIDENCE & SPENDING

While the Conference Board’s monthly consumer confidence index declined 1.5 points in January, it remained at a high level with a 111.8 reading. Personal spending improved 0.5% in December, with personal incomes up 0.3%. ²

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If you want to retire to another area, think about whether it makes sense for you financially as well as socially. Will you be able to find part-time work there, if needed? Could local economic factors make the area less affordable for you someday?

HOUSEHOLD SENTIMENT GAUGE RISES AGAIN

The University of Michigan’s Index of Consumer Sentiment gained 0.4 points from its preliminary reading this month to reach a final January mark of 98.5. That represents a 12-year peak for the index, which stood at 92.0 in January 2016.^1,2

HOME SALES FELL IN DECEMBER

Given costlier mortgages, rising prices, and tight inventory, the December retreat for resales was not surprising. The National Association of Realtors said that existing home sales slipped by 2.8% last month. New home sales dropped 10.4%, but the Census Bureau stated that they increased 12.2% for 2016, marking the best year for new home buying since 2007. ³

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If you think you will receive a federal tax refund this year, why not file electronically and arrange a direct deposit to your checking or savings account? Alternately, you can use IRS Direct Pay to make individual and estimated tax payments from your bank accounts.

LARGEST INFLATION ADVANCE IN 5 YEARS

The Consumer Price Index rose 2.1% in 2016, marking its greatest annual gain since 2011. During 2015, consumer prices only increased by 0.7%. December saw a 0.3% rise for the headline CPI and a 0.2% gain for the core CPI (which excludes food and energy costs). The core CPI gained 2.2% last year.¹

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In a two-parent household, both parents should have life insurance coverage, even if one of them does not work. If one spouse dies, the money from the life insurance policy can help the surviving spouse pay for child care and education expenses.

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Child care costs for working parents can be steep. Fortunately, some employee benefit plans offer dependent care flexible spending accounts. Parents can pay for qualified child care expenses and get a tax break at the same time by using these FSAs, which can be funded with pre-tax dollars.

RISING WAGES, MODERATE HIRING IN DECEMBER

The Department of Labor’s latest employment report shows the average hourly wage at $26.00 last month, up 2.9% in a year. That is the largest annualized wage increase seen since June 2009. Payrolls expanded by 156,000 additional hires in December, leaving total 2016 job growth at a 5-year low of 2.2 million. (This could be a sign of the labor market reaching full employment.) The headline jobless rate ticked up to 4.7%, while the U-6 rate encompassing the underemployed was at 9.2%.¹

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Sometimes, high earners accumulate substantial cash reserves in addition to significant retirement savings accounts. With interest rates still near historic lows and many bank accounts yielding next to nothing, some of that cash might be better off invested.

A SURGE IN CONSUMER OPTIMISM

The Conference Board’s consumer confidence index continued to climb in December. Analysts polled by MarketWatch projected a reading of 110.0 for the gauge, but it beat that forecast, rising 4.3 points to a 15-year peak of 113.7. The major factor in the gain? Growing expectations of a better economy, particularly among older Americans. The CB’s monthly expectations index reached a high unseen since December 2003.^1,2

PENDING HOME SALES SLIP

Housing contract activity declined 2.5% in November, according to the latest research from the National Association of Realtors. In October, pending sales were up by just 0.1%.¹

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Need some business capital? Be aware that most banks and credit unions will want you to put 20% down as a condition of a loan. Lenders will probably also ask to see up to three years of your firm’s financial records.

FED RAISES RATES, PLOTS THREE 2017 HIKES

Federal Reserve policymakers unanimously chose to raise the benchmark interest rate by a quarter point last week. That was expected; less expected was the central bank’s adjustment to its 2017 dot-plot. Fed officials now see three rate hikes next year instead of two. The move to the new target range of 0.50-0.75% sent the dollar and bond yields higher Wednesday – the yield on the 2-year note quickly touched a peak unseen since August 2009. Stocks suffered only moderate losses after the announcement. Federal Open Market Committee members now forecast economic growth of 2.1% in 2017 and 2.0% in 2018.¹

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If you use your own car or truck for business purposes, that vehicle should be insured under a business policy.

SERVICE SECTOR LOOKS VERY HEALTHY

The Institute for Supply Management’s monthly services index improved 2.4 points in November to a 57.2 reading. Analysts polled by Briefing.com had expected a small gain to 55.6. It was the PMI’s best reading since October 2015, and it marked the 82nd consecutive month of expansion for the non-manufacturing segment of the economy.¹

HOUSEHOLD SENTIMENT SOARS

Rising 4.2 points to a mark of 98.0, December’s initial University of Michigan consumer sentiment index came in just a tenth of a point below its most recent (2015) peak. This was one of the index’s three highest readings in the last 12 years. The main reason, in the words of University of Michigan economist Richard Curtin: “More consumers spontaneously mentioned the expected positive impact of new economic policies than ever before recorded in the long history of the surveys.”²

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Jointly owned assets typically avoid probate when one owner dies. With regard to asset transfer, joint ownership can result in a savings of money and time for a surviving spouse.

JOBS REPORT SHOWS UNEMPLOYMENT AT 4.6%

America’s jobless rate fell to a nine-year low in November as companies added 178,000 net new jobs. The U-6 rate (including the underemployed decreased) 0.2% to 9.3%. There were some negatives: yearly wage growth moderated to 2.5%, and the labor force participation rate ticked down to 62.7%, in part because of baby boomer retirements.¹

STRONG CONSUMER CONFIDENCE, SPENDING, GDP

As November ended, the Conference Board’s monthly consumer confidence index rose 6.3 points to a mark of 107.1. In October, personal spending increased 0.3%, according to the Census Bureau, with personal incomes up 0.6%. The Bureau of Economic Analysis revised third quarter growth upward by 0.3% to 3.2% last week. ²

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If you are giving cash gifts to relatives this holiday season, make sure that the gifts do not force you into making financial compromises. In helping others, you should not seriously hurt your own finances.