A Report Card on the American Household.... We Are Looking Good!
Consider if you will the past eighteen+ months+ of activity in the US economy and the sources of economic well-being of the American people, such as jobs, investments, tax cuts and home ownership. How does all this connect to the American household? Here's a summary of where we are:
JOBS: Since January, 2017, the economy has added 4+ million jobs. The details:
Current forecast for growth of the economy the next twelve months is estimated at 4%. Note that, for every increase of 1% in growth, GDP rises by $3 Trillion and the economy adds 10 million jobs.
Per Gallup survey (May, 2018), two out of three Americans believe now is a good time to find a quality job. And in a Natl. Association of Manufacturers Poll released in mid-June, 95% of Manufacturers are optimistic about the economy, the highest rating ever recorded since the start of the survey twenty years ago.
For decades, US companies have accumulated
an estimated $3 to 5+ Trillion dollars in profits
earned outside the US. The profits have stayed
outside the US because bringing those dollars
home would be a taxable event of 35%. However,
under the Tax Cuts and Jobs Act, the funds can
now be brought back to the US at a one-time
repatriation rate of 15%. US companies will
evaluate the pros and cons of wiring billions of
dollars stateside and act in their best interest.
What we do know is that, whatever a company
does with these funds, it creates jobs. In the first Q of 2018, $305B has returned to US, with results such as:
If large sums of money return to the US, it could add major impetus to the economy and job growth. How much impact? It’s an Unknown Unknown since no country in history has ever been in such a position. Perhaps the closest example of wealth transfer and its positive economic impact would be the shift of wealth from the new world to a half-dozen European countries centuries ago. It enriched those countries at the expense of the new world, but nothing like this scale of wealth transfer.
A second, related Unknown Unknown is what actions the US will take to deal with the biggest tax windfall in history? What if $5 Trillion dollars arrived in US banks from overseas next month, representing a tax windfall, using the 15% rate, of $800 Billion+ dollars? Two core options include turning politicians loose to spend it, or sending it to the Treasury department to apply to reduction of the national debt. An important national conversation needs to happen….
HISTORY:In 1952, 6.5 million Americans owned common stock, which is 4.2% of the population of that time. This era precedes mutual funds and a variety of investment vehicles that were not available in the 1950’s. Well, things have changed!
TODAY: Since the election of 2016, the Dow an related market indicators are up 35%+, representing an increase of $9.4 Trillion in wealth for Americans. Who benefits? How about:
Pause and consider the record noted. The American people, to borrow Karl Marx’s favorite standard, own the means of production. The most widely distributed ownership of corporate assets in history is right now. Marx advocated government ownership and control of the means of production, which empowered government over the people. Marx never dreamed of the possibility that the people would be in charge of the productive capacity of the country. The record is clear. We the people own America!
TAX CUTS AND JOBS ACT
First, some key facts about our workforce:
So the average American family is managing its monthly budget with about 60% of gross pay. Not anymore! The Tax Cuts and Jobs Act reduces tax liability for over 90% of taxpayers. Per Heritage Fdn study, take home pay increased by $1400 a year for single earner and $2917 for family of four in 2018. An incredible lift to the family budgets of the American people.
The American dream of owning a home has a long history, perhaps related to owning farms and land in the past. In 1950, for the first time, America became a nation of majority home owners, with 55 percent of households. In 2017, home ownership increased to 63.9 percent of households, out of a housing stock of 135 million. Home ownership averaged 65.25 percent from 1965 until 2017, reaching an all-time high of 69.20 percent in the second quarter of 2004 and a record low of 62.90 percent in the second quarter of 1965.
Net value of homes in the US increased by $2 trillion in 2017, with total valuation of $31.5 trillion. Home ownership is a vital source of net worth for millions of American families, and this addition of $2 Trillion added value for their investments. And the numbers of families acquiring homes is on the increase.
On the basis of jobs, the economy, investments, more take home pay per family and home-ownership, the American people should be feeling good! America Rocks!