Archive for October, 2019

US GDP Growth Quarter over Quarter 3rd Quarter 2019

US GDP Growth Slows Less than Expected

The US economy grew by an annualized 1.9 percent in the third quarter of 2019, beating market expectations of 1.6 percent and following a 2.0 percent expansion in the previous three-month period, the advance estimate showed.

 

Personal consumption expenditures (PCE) rose 2.9 percent in the third quarter (vs 4.6 percent in Q2) mainly boosted by consumption of goods (5.5 percent vs 8.6 percent), in particular durable goods (7.6 percent vs 13.0 percent), and services (1.7 percent vs 2.8 percent). Federal government spending advanced 3.4 percent (vs 8.3 percent in Q2) and state and local government spending rose 1.1 percent (vs 2.7 percent in Q2). In addition, there was a rebound in both residential fixed investment (5.1 percent vs -3.0 percent) and exports (0.7 percent vs -5.7 percent).

Business investment shrank 3.0 percent, the sharpest contraction in more than 3-1/2 years, dragged by declines in spending on equipment and nonresidential structures such as mining exploration, shafts and wells. Business accumulated inventory at USD 69.0 billion pace after building stocks at a USD 69.4 billion rate in the second quarter.

Also, imports rose 1.2 percent (vs 0.0 percent in Q2) led by purchases of services (4.4 percent vs -0.7 percent).

The price index for gross domestic purchases increased 1.4 percent in the third quarter, compared with an increase of 2.2 percent in the second quarter. The PCE price index increased 1.5 percent, compared with an increase of 2.4 percent. Excluding food and energy prices, the PCE price index increased 2.2 percent, compared with an increase of 1.9 percent.

https://tradingeconomics.com/united-states/gdp-growth

 

FSI legislative discussion

Kevin S. Whiteford was the only agent/advisor asked to accompany Cambridge Investment Research, Inc’s team to discuss important pending legislature in Washington D.C. Kevin is a member of the Financial Services Institute (FSI), and discussed the following topics with United States Congress Members.

 

 

Promoting Retirement Security

The Financial Services Institute (FSI)1 supports reasonable efforts to improve the ability of Main Street Americans to save for a financially secure retirement. While the state and federal governments can be good partners in this effort, we believe that retirement solutions should be provided by the private sector to ensure that Americans have access to personalized investment advice.

1 The Financial Services Institute (FSI) is the only organization advocating solely on behalf of independent financial advisors and independent financial services firms. Since 2004, through advocacy, education and public awareness, FSI has successfully promoted a more responsible regulatory environment for nearly 40,000 independent financial advisors, and more than 100 independent financial services firms who represent upwards of 160,000 affiliated financial advisors. For more information, visit www.financialservices.org.

2 The Insured Retirement Institute, The State of Retirement Security in America Today – 2019 Boomer Expectations for Retirement Study available at: https://www.myirionline.org/docs/default-source/default-document-library/iri_babyboomers_whitepaper_2019_final.pdf?sfvrsn=0; Claude Montmarquette, Nathalie Viennot-Briot, Centre for Interuniversity Research and Analysis on Organizations (CIRANO), The Gamma Factor and the Value of Advice of a Financial Advisor, available at https://www.cirano.qc.ca/files/publications/2016s-35.pdf

All investors should have access to competent and affordable financial advice, products and services delivered by a growing network of independent financial advisors and independent financial services firms.

Having a relationship with a trusted financial advisor is crucial to saving for retirement. Research shows that investors who work with a financial advisor are better prepared for their retirement, better understand the costs that may arise in retirement and how to save for them, and feel more confident in their ability to be successful in retirement.2 In order to ensure that Main Street investors have access to critical financial advice, products and services, FSI supports retirement security legislation that includes the following:

Expand workplace retirement savings opportunities

Small Businesses across the country struggle to absorb the cost of offering retirement savings options to employees. Legislation can fix this critical gap in coverage by:

  • Providing tax incentives to enable more small employers to help their employees save for retirement; and
  • Enabling more small employers to use multiple employer plans.

 

Remove the age cap on IRA contributions

As Americans are living and working longer than ever before, allowing IRA contributions for as long as someone is working will ensure they can continue to save for retirement.

Expand access to lifetime income products in retirement plans

Increasing access to lifetime income products in retirement plans will ensure that Americans have the tools they need to turn their savings into protected income streams.

Allow the tax deductibility of advisory fees

Seeking help navigating the complexities of retirement savings should not result in tax challenges for Americans. Permitting savers to deduct investment advisory fees will immediately impact their bottom line and allow their retirement savings to grow.

FSI is committed to constructive engagement in the legislative process. We are ready to serve as a resource in your efforts to help Main Street Americans save for their retirement. Should you have any questions, please contact our Director of Legislative Affairs, Hanna Laver, at (202) 499-7224.


End Regulation by Enforcement

Introduction

The Financial Services Institute (FSI)1 and its members are concerned that a recent SEC enforcement initiative constitutes regulation by enforcement. This practice harms firms by failing to provide the necessary certainty for them to operate their business -independent financial advisors and firms have a reasonable expectation the SEC will disclose the rules of the road before engaging in enforcement. Further, regulation by enforcement raises costs for firms, which are then passed on to Main Street investors.

1 The Financial Services Institute (FSI) is the only organization advocating solely on behalf of independent financial advisors and independent financial services firms. Since 2004, through advocacy, education and public awareness, FSI has successfully promoted a more responsible regulatory environment for nearly 40,000 independent financial advisors, and more than 100 independent financial services firms who represent upwards of 160,000 affiliated financial advisors. For more information, visit www.financialservices.org.

Share Class Selection Disclosure Initiative

The Share Class Selection Disclosure Initiative was announced in February 2018, firms were given four months to voluntarily self-report instances where they may have failed to adequately disclose certain fees that investors pay and recommendations of higher cost share classes when lower cost shares of the same investments were available. In exchange, the SEC’s Enforcement Division agreed to recommend “lighter” settlements and lower fines, while warning that firms who did not self-report would face steeper penalties

However, Division staff could not cite a clear rule or regulation that had been violated instead citing previous settlements and published guidance as the basis for the violations. Further, firms report that the issue of inadequate share class disclosures was never raised during their regular exam cycles. If this was an issue of concern to the SEC, why was it not raised earlier so that firms had an opportunity to fix it sooner?

To date, the Initiative has collected $125 million from almost 80 investment advisers. In addition, firms that did not report during the Initiative are receiving document requests from the SEC alleging that they have engaged in misconduct but failed to take advantage of the Initiative. The Division is reportedly now moving to a second phase in the initiative, expanding its scope to other areas not identified in the original Initiative.

This practice of imposing regulatory requirements through the enforcement process runs counter to the statements of Chairman Clayton and Commissioner Peirce:

  • “The Commission’s longstanding position is that all staff statements are nonbinding and create no enforceable legal rights or obligations of the Commission or other parties.” Chairman Jay Clayton’s “Statement Regarding SEC Staff Views,” made on September 13, 2018.
  • “I have grown increasingly concerned that this necessary guidance—due to a lack of transparency and accountability—may have turned into a body of secret law. This secret law, as a practical matter, binds market participants like law does but is immune from judicial—and even Commission—review.” Commissioner Hester Peirce’s Remarks at SEC Speaks made on April 8, 2019.

 

Regulation by enforcement deprives industry of the opportunity for notice and comment required by law under the Administrative Procedure Act. Without proper notice of the “rules of the road” financial advisors and their firms cannot serve their clients, depriving Main Street investors of access to critical investment advice, products and services. For more information, visit https://financialservices.org/regs-without-rules/

 

US Job Openings August 2019

US Job Openings August 2019

The number of job openings fell to 7.051 million in August 2019 from a downwardly revised 7.174 million in the previous month and below market expectations of 7.191 million. It was the lowest level since March 2018, mainly driven by a decline in the Midwest region (-183,000). Job openings decreased in nondurable goods manufacturing (-49,000) and in information (-47,000). Meanwhile, hiring dropped by 199,000 to 5.779 million in August, due to decreases in the private sector. Job Offers in the United States averaged 4452.07 Thousand from 2000 until 2019, reaching an all time high of 7626 Thousand in November of 2018 and a record low of 2264 Thousand in July of 2009.

https://tradingeconomics.com/united-states/job-offers

US Jobless Rate Falls to Lowest Since 1969

US Jobless Rate Falls to Lowest Since 1969

The US unemployment rate decreased to 3.5 percent in September 2019 from 3.7 percent in the previous month and above below market expectations of 3.7 percent. The last time the rate was this low was in December 1969, when it also was 3.5 percent. Over the month, the number of unemployed persons decreased by 275,000 to 5.8 million.

 

 

Among the major worker groups, the unemployment rate for Whites declined to 3.2 percent in September. The jobless rates for adult men (3.2 percent), adult women (3.1 percent), teenagers (12.5 percent), Blacks (5.5 percent), Asians (2.5 percent), and Hispanics (3.9 percent) showed little or no change over the month.

Among the unemployed, the number of job losers and persons who completed temporary jobs declined by 304,000 to 2.6 million in September, while the number of new entrants increased by 103,000 to 677,000. New entrants are unemployed persons who never previously worked.

In September, the number of persons unemployed for less than 5 weeks fell by 339,000 to 1.9 million. The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.3 million and accounted for 22.7 percent of the unemployed.

The labor force participation rate held at 63.2 percent in September. The employment-population ratio, at 61.0 percent, was little changed over the month but was up by 0.6 percentage point over the year. 

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 4.4 million in September. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs.

In September, 1.3 million persons were marginally attached to the labor force, down by 278,000 from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 321,000 discouraged workers in September, little changed from a year earlier. (Data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 978,000 persons marginally attached to the labor force in September had not searched for work for reasons such as school attendance or family responsibilities.

 

https://tradingeconomics.com/united-states/unemployment-rate