This week has been very busy, with our Board of Advisers meeting and our Personal Finance Symposium VI entitled “HELP, I Need Somebody.” I have heard very positive comments from several participants. Soon, we will have video tapes of the program produced and available at http://pfp.missouri.edu, our department website. (Until then, last year’s presentations are available.)
For each presentation, I have decided that I can provide bullets which I thought were “take-aways”. These may be of interest to you. They follow…
Back on the Ground, Budgeting our Economy, Stephanie Kelton, Ph.D., Chair, Department of Economics, University of Missouri-Kansas City, Kansas City, MO
- One’s spending creates another’s income. That income leads to more buying which creates jobs.
- The federal deficit is, as a result, best thought of as spending to create jobs.
- The federal government will not run out of money. They can print money. If done correctly, it will not be inflationary.
- One of the reasons that Greece, for example, began to have trouble is that they could not print more money once they adopted the Euro.
- Most inflation arises from variation in commodity prices, not excessive demand.
Living on the Edge, Six Years After the Financial Crisis, Jim Fuchs, Assistant Vice President, Federal Reserve Bank of St. Louis, St. Louis, MO
- Expansion in continuing.
- The Federal Reserve Bank Targets:
- Maximum employment (goal is an unemployment rate < 6.5 percent)
- Inflation of 2 percent
- Long-term inflationary expectations “well anchored”
- The consensus estimates for the Federal Funds rates are
- 2014 = 0.297%
- 2015 = 1.125%
- 2016 = 2.422%
- Long run = 3.875%
- (editorial remark: Get your fixed rate mortgage now!)
- Projected unemployment less than 6%
- Between 1994 and 2013 the number of community banks (assets < $10 billion) has decreased from 10,286 to 5,722. Much of this is due to the outmigration from rural areas.
- Housing foreclosures remain a problem in many states. Most notably those occur where the lender must go to court, prior to foreclosure. Much of the state of Florida still has a 10%, or greater, foreclosure rate.
- Housing in Las Vegas remains at 44% below its 2008 peak price. Only in the city of Denver are prices above (2.7%) the 2008 peak.
- Commercial lending standards have become more lenient, a good sign for continued recovery.
- The typical household has regain 65% of the wealth they had in 2007.
- Younger, less-educated, and non-white families lost the most wealth while older, better-educated, and White and Asian families have recovered well.
- Incomes have continued to rise for those households over the age of 65 but have decreased for all other age categories.
- Inflation adjusted median incomes are about the same today, as they were in 1990, for those with a college education. For lesser educational categories, inflation adjusted median incomes are 15% to 20% less than 1990.
- Mean household net-worth has returned to its pre-recession level but median net-worth remains about 1/3 lower. (Said differently, higher net worth individuals have recovered to a level above where they were prior to the recession.)
- Younger families lost the most net-worth, while older households lost the least.
- Well-educated households regained the most ground, with respect to net-worth.
- Home ownership rates have fallen faster for the young, while remaining pretty constant for those over the age of 62.
Campus Welcome – Chancellor R. Bowen Loftin
- What a nice and likable man everyone finds Chancellor Loftin to be.
Understanding the Affordable Care Act: Health Reform in Missouri, Thomas McAuliffe, Missouri Foundation for Health, St. Louis, MO
- 1/3 of Medicare expenditures goes to treat diabetes and much of this could be reduced with earlier discovery and treatment.
- It is estimated the 90,000 people die in the US per year that would not die in a single-payer medical insurance system like France, Canada, England, or Japan.
- The two largest reasons people do not have medical insurance are 1) not affordable (31.6%) and 2) lost job (29.4%).
- Changes to Private Insurance
- No annual or lifetime limits on essential health benefits
- No dropping coverage if you get sick
- No pre-existing conditions exclusions
- Guaranteed issue
- Young adults can stay on parents’ coverage up to age 26
- 80-85% of premium $ must be spent on health services
- Likely outcomes:
- Greater transparency of cost of insurance
- Focus on prevention
- Better delivery of care
- New payment models
- More individuals will be obtaining medical care
- Early diagnosis
- Less medical debt
Opportunities for Collaboration between Academia and Practice in Financial Planning, Charles R. Chaffin, Ed.D., Director of Academic Programs and Initiatives, Certified Financial Planner Board of Standards, Inc., Washington, DC
- Financial Planning is increasingly a profession
- CFP Board Registered Programs: 124 Baccalaureate, 183 Certificate, 48 Master’s, and 6 Doctoral (editorial comment: PFP at MIZZOU is one of the six)
- Financial Planner education is increasingly including psychology, counseling, internships, and greater diversity.
- Oral and written communication are key elements to financial planning.
- The CFP Code of Ethics is what sets apart the CFP mark. This is similar to the 17th century blacksmith being replaced by a dentist.
- Practitioners need to be more involved in CFP educational programs and support those institutions with time, as well as money.
There was more, much more. Yet, for those of you who couldn’t attend here, the above provides you with something to take to the break room, the coffee shop, or to your friends’ homes and talk. We can’t reach financial success, unless we continue to learn and adapt to the changing American financial landscape.
Please, we welcome your attendance at next year’s Symposium.
– Rob Weagley
PS: I’m not sure what I did differently but this failed to send at 5am, as we prefer. Then, this was one day I left my PC at the office so I had to return now to send it. I hope you find it worthwhile. Enjoy your day.