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  • Median Household Income Down Last 15 Years - Why?

    One of the most puzzling questions in economics today is why did median household income peak in 1999 and has yet to recover? Most analysts cite the fact that we had two serious recessions in the space of a decade, including the financial crisis of 2008-2009.

    While the Great Recession ended in June 2009, real median household income (adjusted for inflation) remains well below the peak of around $57,000 in 1999 and has been below $52,000 in each of the last three years. The question is, why?

    The standard answers, especially among progressives, are: 1) the sluggish economic recovery; 2) growing income inequality; 3) the failure to raise the minimum wage; 4) globalization and outsourcing; 5) corporate greed; and other variations of economic pessimism.

    However, there are some other very obvious, but mostly overlooked, factors that can help explain why median household income has declined over the last 15 years that have nothing to do with economic stagnation. The fact is that there have been significant demographic changes in the composition of US households.

    Economists Mark Perry and Alex Pollock, who also are contributors at the American Enterprise Institute, offered a very interesting analysis on median household income last week, and I will summarize their latest work for you today. I think you'll be surprised.

    Also, we'll look at the reasons why the marriage rate in the US is now at a 93-year low, according to the Census Bureau. The marriage rate for those 18 and older has fallen to a new low of only 50.3%, down from the peak of 72.2% in 1960.  And finally, we'll end with an interesting article from Larry Kudlow on the subject of marriage.

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  • Unemployment Dips Below 6%, But Incomes Stagnate

    Last Friday’s unemployment report came in better than expected. The headline unemployment rate fell more than anticipated, from 6.1% in August to 5.9% last month. The number of new jobs created last month was also better than expected at 248,000.

    Given that the unemployment rate is now below 6%, and given that 2Q GDP expanded by 4.6%, you might think the economy is finally off to the races. But what is becoming increasingly clear is that wages for most Americans have been stagnant or falling since before the Great Recession began in late 2007.

    As we will see below, this trend of stagnant income has actually been with us since the early 2000s. Without rising incomes, there’s little reason for people to feel like their financial lives are getting better or for the economy to grow at a faster rate.

    Fortunately, not all the news is bad. While the vast majority of Americans believe that we’re either still in a recession or the country is headed in the wrong direction, pessimism in the business community is lifting. Companies are investing more in capital assets. After years of sitting on their hands, companies are beginning once again to build their businesses.

    Finally, recorded versions of our recent webinars with Potomac Fund Management and YCG Investments are now available on our website at www.halbertwealth.com. Both managers explain in detail how their investment strategies work. I encourage you to watch these videos to see if their strategies are a fit for your portfolio.

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  • Why Household Income Is Down Five Years Straight

    Between 1999 and 2012, the average US household lost over 9% in income. According to the Census Bureau, the median household income was $51,017 in 2012, compared to $55,080 at the peak in 1999. In short, most Americans are working harder but earning less. Today, we’ll look at the data and discuss why this trend continues even though the economy is in a slow recovery.

    In a similar pattern, growth in US worker productivity is also in decline. Productivity grew only 1.5% in 2012 versus 3.3% in 2010. So far this year, productivity is up only 1.9%. While that’s a modest improvement over last year, it’s still quite low. We’ll take a closer look at this problem as we go along today.

    The Bureau of Labor Statistics recently reported that there are over 27 million Americans who are “under-employed.” These Americans include those who are officially considered unemployed, plus involuntary part-time workers and “marginally-attached” workers – those who have not looked for work within the last four weeks. That is a new record high. And you’ll also be saddened to learn that almost half of college graduates work in jobs that do not require a college degree.

    But before we delve into the topics above, I want to alert you to two key economic reports that will be out this week. The second revision of 3Q GDP will be out on Thursday morning, and the November unemployment rate will be announced on Friday. I’ll tell you what to look for below.

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  • Finally, a Solution to the Income Investing Dilemma

    This week, I'm going to address a topic that our surveys show is on the minds of many investors - income. In our 2012 survey, it came out loud and clear that many of my clients and readers are interested in producing income from their portfolios. Plus, there are others who are interested in income-type investments because such programs usually have the goal of preserving principal while also providing better returns than fixed income investments.

    This week, I'm going to discuss the plight of income investors in today's low-interest environment and what they can do about it. I'll also unveil a new investment geared specifically toward conservative growth and producing income - the Managed Income Strategy offered by Hanlon Investment Management. If you need an income from your nest egg or are seeking a conservative growth investment that takes risk management very seriously, the Managed Income Strategy may be just what you're looking for.

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  • Income Inequality and the Top 1%

    This week we're going to dive head-first into the discussion about the top 1% of households by income. While there have been various definitions of the "rich," that should be taxed at higher rates, the Occupy Wall Street crowd has definitely honed in on the top 1% as the embodiment of everything wrong with America in general and capitalism in particular.

    First, I have reprinted an excellent article by Alan Reynolds that brings a recent CBO report about income inequality into a much better focus. It seems that the CBO cherry picked some data to show income disparity is growing when, in reality, it has diminished over the last two years.

    I will then provide a further analysis on the long-term capital gains and dividend tax rates which are drawing criticism based on pleas from Warren Buffett to be taxed at higher rates. I'll then end up with a dozen of the most popular tax breaks that are available to virtually anyone reading this E-Letter, as well as the cost of each in lost revenue. The unfortunate result of my analysis is that higher taxes for the top 1% of households isn't likely to make a meaningful dent in federal budget deficits and could cost jobs.

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  • Retirement Income With Limited Risk

    IN THIS ISSUE:

    1.   The Retirement Income Dilemma

    2.   Convertible Bonds as an Income Option

    3.   Revisiting the Advantages of Convertible Bonds

    4.   The Wellesley Advantage – A New Webinar

    5.   Another Chance to Hear Greg Miller, CPA

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