President Obama called for a +24% increase in the federal minimum wage during his State of the Union address. The proposal would take the current level from $7.25 an hour to $9 an hour by the end of 2015. The president’s recommendation stirred emotions from hourly workers nationwide of the daily struggles of living on a minimum wage. Small business owners countered that complaint with the reality that when you add to the $9 hourly wage the various benefits that are either legally required (e.g., Social Security) or are provided to attract and retain workers (e.g., retirement plans and paid leave), the total cost per employee reaches $13 per hour (source: Department of Labor).
The countdown to the next debt ceiling debate sits at 3 months as of today. The legislation signed by President Obama on 2/04/13 temporarily suspended the imposition of a debt ceiling limit until 5/19/13, at which point the debt ceiling will be reinstated at the actual amount of national debt outstanding as of that date. Last week’s report that the government had produced a $2.8 billion surplus in January 2013, its 3rd surplus month in just the last 10 months, was welcomed news. In the previous 3 ½ years, Uncle Sam did not have a single surplus month (source: Treasury Department).
The possibility of currency manipulation was on the minds of the finance ministers that met last week in Moscow. The question of currency devaluation has always been viewed through the prism of one’s own self-interest. When the US Federal Reserve embarked on a 4+ year program of “quantitative easing” in November 2008 designed to lower interest rates domestically, the weakening of the dollar was seen as just a side effect. However when Japan’s central bank implements a similar policy, Americans bark that Japanese exporters are the recipients of an unfair trade advantage (source: BTN Research).
Notable Numbers for the Week:
1. NOT BEHIND IT - Only 44% of Americans believe that our country has benefited from the free trade agreements that the USA has implemented with foreign countries (source: Hamilton Place Strategies).
2. WHO BENEFITS? - 19% of Americans (60.4 million in total) receive a monthly benefit check from the Social Security Administration (source: SSA).
3. SNIDELY WHIPLASH - US banks repossessed 50,572 homes in January 2013, an average of 1,632 homes per day. The 50,572 in lost homes was the lowest monthly total in the country since February 2008. 87,648 homes were seized by banks 3 years ago in January 2010 (source: RealtyTrac).
4. RECESSION STAT - The United States has been in a recession only 34 months in the last 30 years (source: National Bureau of Economic Research).
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This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market. Copyright © 2013 Michael A. Higley. All rights reserved.
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