Our Thoughts

FJY News to Know #52

Economists Missed the Mark on The Past Decade’s Predictions: Where They Got It Wrong

From 2009 to 2015, economists made a repeated prediction that the recession recovery would move a smidge slower, but similar to previous economic recoveries. Year after year, rates didn’t change until 2015. With a predicted rise in rates going up to 4.2%, economists were way off the mark when the decade closed out between 1.5% and 1.75%. How did they get it so wrong? Experts point to three different theories:

  1. The “Debt Hangover” Theory
  2. Secular Stagnation
  3. Natural Rate of Unemployment

Read more here to learn more about these theories.

Healthcare and Retail Pharmacies Among the Dow’s Biggest Losers in 2019

This year has not been kind to Walgreen’s.  Its stock suffered a 19%+ loss this year.  Most experts cite waning traffic and rising drug costs — but also the threat of Amazon throwing its hat into the pharmacy ring.  The pharmacy giant joined the Dow 30 in the summer of 2018, but investors aren’t happy with timely forces — which have weakened their confidence in the company.  Pfizer stock is down 17.7% so far this year, with most of that in the past few months.  To read about other stock losers, including the industrial variety — please visit this page.

SECURE Act Paves the Way for a New and Revised 529 Plan & Form

The recently passed SECURE Act has engineered a more flexible 529 plan for students and their relatives.  Many families use a combination of income, 529 savings and student loans to pay for college.  Now they can use any leftovers to repay student loans tax-free up to $10,000.  This is a new allowance for student debt repayment plans. To read more about other revisions to the 529, click here. For a deeper dive into the impacts of the SECURE Act, be sure to read our latest blog.

Eight Oil Rigs Idle for Lighter Production — and a Higher Price Per Barrel

Oil prices rose to the fourth week in a row at last Friday’s closing bell.  Prices steadied at three-month highs — after new data showed U.S. crude inventories fell far more than expected.  Meanwhile,  upbeat economic data and optimism over a U.S.-China trade deal fueled a year-end stock market rally.  U.S. crude stocks fell by 5.5 million barrels in the week to Dec. 20th to 441.4 million barrels — according to the Energy Information Administration; analysts were anticipating a 1.7 million-barrel drop.  A year-end stock market rally also helped lift oil prices as consumer sentiment improved.  To read more about the oil industry’s sudden change in production, visit this page.

The SECURE Act Will Impact the IRA — Making the Roth Look Better Than Ever

In the past, the ‘stretch provision’ allowed IRA account holders or account heirs to take distributions over a lifetime.  However, this item has been eliminated by the new SECURE Act of 2019.  Under prior law, one could take a distribution on an inherited IRA over our life expectancy; this allowed us to take smaller distributions and continue the tax deferral advantages.  Given that IRAs will now have to be distributed within ten years, generally, the beneficiary will pay taxes at a higher rate.  Roth IRAs are now subject to the 10-year rule, but their tax status is easier to stomach.  Read about the advantages of the Roth in this article and more about the SECURE Act in our latest blog.