Vorisek Financial Weekly Market Update for March 21, 2018

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Good morning!

As the real estate crisis exploded across the United States nearly a decade ago, the fragility of our banking system was exposed.  During the 4-year stretch from 2009-2012, 440 banks failed (an average of 2 per week), requiring $60 billion to cover the losses.  But changes implemented in the wake of the crisis have strengthened the balance sheets of US banks and forced necessary improvements in the lending process.  As of last Friday (3/16/18), no US bank had required a financial bailout from the FDIC so far this year.  This is the latest in any calendar year with no bank failures YTD since 2006, the last year in which no bank failures occurred during the entire year.  Over the last 5 calendar years (2013-17), just 63 banks have failed in the United States, an average of only 13 per year (source: Federal Deposit Insurance Corporation).             

The 6.3 million job openings reported last week for January 2018 was the highest number ever recorded in the United States (note this statistic has been tracked by the government since December 2000).  That total is 3 times the size of the 2.1 million job openings that existed in July 2009.  The fact that the USA still has 6.7 million jobless Americans who are actively looking for full-time employment suggests that employers are not finding the right candidates during the interview process (source: Department of Labor).         

Our national debt crossed another “trillion-dollar” threshold last week, hitting $21 trillion last Thursday (3/15/18).  Legislation signed into law by President Donald Trump on 2/09/18 suspended our country’s debt ceiling limit until 3/01/19, i.e., there is no statutory limit on our nation’s borrowing until then.  The debt limit has been raised, temporarily extended or suspended 78 times since 1960 (source: Treasury Department).      

Notable Numbers for the Week:

  1. LONGER - The 11 bull markets for the S&P 500 since the end of World War II have averaged 5.2 years in length.  The current bull market reached 9 years in length on 3/09/18 (source: BTN Research).  

  2. WE DON’T MAKE STUFF - There were 12.6 million manufacturing jobs in the USA as of 2/28/18.  There were 13.1 million manufacturing jobs in the USA as of 2/28/42 or 76 years ago (source: DOL).

  3. RETIRE WITH DEBT - Only 38% of American retirees are debt-free, i.e., 62% of retirees have outstanding mortgage debt, credit card debt, auto loan debt or student loan debt (source: Society of Actuaries). 

  4. A GIFT, NOT A LOAN - 28% of student loan borrowers (by number, not by dollar) default on their student loans (source: Looney and Yannelis 2015 study). 

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