Here are some interesting factoids about comparing the past and present economy...enjoy!
1. MOST RECENTLY - 7 of the last 9 months (as of 7/31/08) have produced a negative total return for the S&P 500 stock index. Before this most recent 9-month stretch, only 7 of the preceding 31 months resulted in a negative total return. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market (source: BTN Research).
2. OIL DOWN, STOCKS UP - A month ago today (Friday 7/11/08), the price of a barrel of oil hit $147.27, its all-time intraday high and the S&P 500 closed at 1239. Since then, the price of oil has fallen 22% to Friday's close of $115.20 and the S&P 500 has gained almost +5% to last week's close of 1296 (source: BTN Research).
3. BY THE DECADE - The cost of living (as measured by the consumer price index) in the USA increased +24% in the decade of the 50s, +28% in the 60s, +103% in the 70s, +64% in the 80s and +33% in the 90s. For the first 8 years of the current decade (2000-07), the cost of living nationwide has increased +25%. The consumer price index is a measure of inflation compiled by the US Bureau of Labor Studies (source: Department of Labor).
4. A QUIET PERIOD - The next Fed meeting is scheduled for 9/16/08 or just 7 weeks prior to the 11/04/08 presidential election. The nation's central bank has raised or lowered interest rates during the period from mid-September through election day only 1 time in the last 20 years (source: Federal Reserve).
5. WHAT ALAN THINKS - Alan Greenspan, the 82-year old former Fed Chairman, believes the scope of the global credit crunch is significant enough to qualify it as an event that may occur only 1 or 2 times every 100 years. Greenspan said the fear of investors that major financial entities could go bankrupt is what makes this situation so unique (source: Financial Times).
6. BAD LOANS - At least 45% of subprime loans originated in the previous 2 calendar years (i.e., 2006 and 2007) are projected to end up in default (source: Wall Street Journal, UBS).
7. WHAT'S REALLY IMPORTANT - More than 7 out of every 10 Americans (71%) would accept a job that pays less but provides health insurance and includes a defined benefit pension plan rather than take a job that pays more income but lacks both health insurance and a pension benefit (source: Time Magazine).
8. SOUNDS A LITTLE HIGH - 43% of working Americans believe they will be able to withdraw at least 10% per year from their accumulated assets during future retirement years (source: Met Life). Financial advisors recommend withdrawing 4% per annum.
9. ONE WAY TO SOLVE THE PROBLEM - The age at which an American can receive full Social Security retirement benefits is a function of an individual's date of birth and can be no higher than 67 years old under current law. In response to the program's long-term projected financial problems, the American Academy of Actuaries has proposed increasing the maximum age to receive full retirement benefits to 70, an age that would be phased in over an 18-year period (source: American Academy of Actuaries).
10. THE DOCTOR WILL NOW SEE YOU - The average American aged 65 or older makes 7.4 visits per year to a doctor, a hospital and/or an emergency room (source: Center for Disease Control).
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