By The Advocates
Week of February 28, 2022
This week’s The Distillery is a collection of just really interesting / a little scary numbers across markets and the economy, as of the week of February 28th. Remember, money is made by staying disciplined and focusing on the things we can control (allocation, portfolio risk, etc.). All of the numbers listed in this article are interesting, but out of our control.
*The numbers below were produced and published by AMG, a mutual fund distributor.
The S&P 500 closed at 4226 on 2/23/2022, down 11.9% from its 1/03/2022 closing high, the index’s 8th “correction” in the last 20 years, i.e., a fall of at least 10% but less than 20%. The S&P 500 consists of 500 stocks chosen for market size, liquidity and industry group representation. It is a market value weighted index with each stock’s weight in the index proportionate to its market value (source: BTN Research).
The average single-family home in the USA appreciated +54.5% for the 5 years ending 12/31/2021. Homes in Idaho (+118.2%) have experienced the greatest growth while homes in North Dakota (+23.5%) have seen the least percentage increase in value (source: Federal Housing Finance Agency).
The average size of a single-family home built in the US in 2020 was 2,480 square feet, the 5th consecutive year that the national average size has declined (source: Census Bureau).
HIGHEST NUMBERS EVER
Mortgage debt ($10.93 trillion) and auto loan debt ($1.46 trillion) reached all-time record highs as of 12/31/2021, while student loan debt ($1.58 trillion) at the end of 2021 was just $8 billion below its all-time high (source: Federal Reserve Bank of New York).
If the Fed does raise short-term interest rates as expected following its March 15-16 meeting, it will be the first Fed rate hike since 12/19/2018 or 39 months earlier (source: Federal Reserve).
MAKES IT HARDER TO BUY
The average 30-year fixed rate mortgage nationwide was 3.89% last Thursday (2/24/2022), resulting in a $471 monthly “principal and interest” payment per $100,000 borrowed. The lowest average 30-year fixed rate mortgage in US history was 2.65% on 1/07/2021 (14 months ago), resulting in a $403 monthly “principal and interest” payment per $100,000 borrowed (source: Freddie Mac).
NOT A GREAT RETURN
A high-income American couple who retired in 2020 is projected to pay $828,000 (stated as a 2021 present value number) in lifetime Social Security payroll taxes and is projected to receive $849,000 (stated as a 2021 present value number) in lifetime Social Security benefits, i.e., for every $1 paid in taxes, the couple will receive $1.03 in benefits (source: Tax Policy Center).
WHEN IT COMES TO HEALTH CARE
A high-income American couple who retired in 2020 is projected to pay $223,000 (stated as a 2021 present value number) of lifetime Medicare payroll taxes and is projected to receive $510,000 (stated as a 2021 present value number) of Medicare benefits, i.e., for every $1 paid in taxes, the couple will receive $2.29 in benefits (source: Tax Policy Center).
OUR DEMAND OUTPACES OUR PRODUCTION
The United States became a “net exporter of petroleum products” for the first time ever in 2020, i.e., we exported more than we imported. Due to America’s rapidly increasing demand for crude oil in 2022, the US is forecasted to be a “net importer of petroleum products” this year, i.e., we will import more than we export (source: Energy Information Administration).
SUPPLIED BY RUSSIA
41% of the natural gas imported by the 27 nations that make up the European Union is supplied by Russia, along with 25% of the region’s crude oil (source: Eurostat).
GAS AND OIL
Revenue from Russia’s crude oil and natural gas production generates more than 40% of the total revenue of the Russian government. Russia is the # 2 global producer of natural gas and the # 3 global producer of crude oil (source: Council on Foreign Relations).
In President Biden’s State of the Union address tomorrow (3/01/2022), he is expected to ask for a fiscal year 2023 defense budget of $770 billion, i.e., for the 12 months beginning 10/01/2022. Our actual defense spending 10 years earlier in fiscal year 2013 was $633 billion (source: Office of Management and Budget).
THE LAST ELECTION
Even though 154.6 million Americans voted in the November 2020 presidential election, an all-time record, there were another 77 million Americans in our nation’s “citizen voting-age population” who were eligible to vote and did not (source: Census Bureau).
The cost of fertilizer makes up 36% of the operating cost for a US farmer growing corn. The price of nitrogen-based fertilizers, a key input into corn production, is in part driven by the rising price of natural gas in the United States (source: Department of Agriculture).
WILL THERE BE AN OPENING DAY THIS YEAR? Even though the average salary for a major league baseball player was $4.17 million on opening day 2021, 62% of the baseball players in the league on opening day were making less than $1 million and 35% were making less than $600,000 (source: MLB).