September 18, 2019
It’s analogous to not getting sick for as long as you can remember, and wondering when your “good health” streak is going to end? The US economy, in its 123rd consecutive month of “expansion,” is currently experiencing its longest economic stretch without a recession in our nation’s history. We will get “sick” someday because recessions do happen. Since 1950, the US has suffered 10 recessions or approximately one downturn every 7 years. The average duration of those 10 recessions since 1950: 11 months (source: National Bureau of Economic Research).
When the Federal Reserve lowered short-term interest rates on 7/31/19 for the first time in 10 ½ years, Chairman Jerome Powell called the action a “preemptive strike” designed to get ahead of a slowing global economy. The European Central Bank, the central bank for the 19 European nations that use the Euro as their common currency, last week took similar action by cutting interest rates for the first time since 2016. Europe and the United States are leery of the same problems: weak growth, stagnant inflation and trade tensions (source: ECB).
The US government begins a new fiscal year in 2 weeks as fiscal year 2019 ends on Monday 9/30/19 at midnight. With just the final month of the 2019 fiscal year yet to be calculated, the US has already surpassed a trillion-dollar deficit ($1.067 trillion). But chances are good for a financial bounce-back in September: the US has produced a surplus in each of the last 7 Septembers (2012-2018) and the average surplus has been $73 billion, including $119 billion in September 2018 (source: Treasury Department).
Notable Numbers for the Week:
SO FAST - The new 5G technology being installed across the US is estimated to be 20 times faster (in terms of download speed) than the current 4G technology that is in place nationwide (source: Lifewire).
WE’RE ALMOST EVEN - The USA has 121 companies in the Fortune Global 500 rankings for 2019 compared to 119 companies from China. 20 years ago (1999), the USA had 181 companies in the Fortune Global 500 rankings while China had just 5 companies. The rankings are based upon annual revenues (source: Fortune).
GUARANTEED INCOME - The city of Stockton, CA started a program in February 2019 to pay $500 per month to 125 low-income citizens for the next 18 months. There are no restrictions on how recipients can spend the money (source: Stockton Economic Empowerment Demonstration).
IMPACT ON TAXES - A maximum $2,500 of interest expense from student loans is deductible annually from taxable income. Please consult a tax expert for details (source: Internal Revenue Service).
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