Macro-Economic Overview – April 2021

The prospect of resurgent inflation has developed into a growing concern for markets globally. Some believe that current inflationary pressures may be transitory and not lasting, while others contend that higher prices may become more permanent. Rising fiscal deficits along with increasing levels of federal debt are prompting the administration to explore the most significant tax hikes since 1993. Tax …

What The Top 1% Really Owns – Demographics

Wealth, as measured by assets owned by individuals among all income brackets, surprisingly is not as perceived by most. Federal Reserve data show that the top 1% hold just over 11% in real estate-related assets, while the bottom 50% hold over 50% in real estate. Data also reveal that the top 1% own nearly half of all equity and mutual …

Loans May Be Easier To Qualify For As Mortgage Rates Rise

Rising mortgage rates since the beginning of the year have slowed mortgage applications down. Should employment conditions improve allowing more to qualify for loans, then there could be a resurgence in refis and purchases for those that didn’t qualify last year. In addition, some lenders are expected to relax standards as volume declines, easing the loan qualification process. Optimistically, rates …

Stimulus Bill Provisions For Individuals – American Rescue Plan Act of 2021

Economic Impact Payment (EIP) of $1400 per individual with an Adjusted Gross Income (AGI) of up to $75,000 based on 2019 tax returns or 2020 returns if already filed. EIPs for qualifying dependents over 16 years of age based on parent’s income. Up to $10,200 of unemployment compensation exempted from federal income taxes for the tax year 2020 for taxpayers …

Where Anticipated Tax Hikes May Hit – Tax Planning

While the three stimulus programs amount to over $4.5 trillion were mostly funded by government debt, the recently introduced $2.25 trillion infrastructure plan will be primarily funded by tax increases. Preliminary indications are that the anticipated tax hikes will target both corporations and high-earning individuals. The tax increases may be the largest since 1993. The following are among the proposals …

Markets Gain On Optimism – Equity Overview

Optimism deriving from continuing fiscal and monetary stimulus efforts in addition to vaccination progress drove equities higher in the first quarter. Major equity indices moved higher with the energy, financial and industrial sectors leading in the first quarter. International developed market indices were mostly positive for the first quarter, with emerging market indices primarily flat to negative amid growing debt …

How Government Inflation Gauges Differ – Macro-Economic Dynamics

The traditional gauge for inflation, known as the Consumer Price Index (CPI), is being challenged by yet another government-produced measure known as Consumer Expectations. The most recent data released shows an inflation rate of 1.7%, as noted by the CPI compiled by the Bureau of Economic Analysis for February 2021. The Federal Reserve maintains its own inflation gauge, yet is …

Yields Continue To Move Upward – Fixed Income Update

Yields rose across all fixed income sectors, with the 10-year Treasury yield reaching 1.74% as of March 31st, the highest level since January 2020. The onslaught of rising yields has been in conjunction with heightened inflationary pressures. Some analysts and economists believe that interest rates will rise more slowly in response to inflation, allowing for gradually elevating bond yields. Higher …

Macro Economic Overview

Stimulus payments from the second pandemic relief package were received in January and February, stirring economic activity and increasing personal incomes and expenditures. Some economists, however, believe that the rise in incomes and expenditures are short-lived and not consistent. An anticipated third round of stimulus payments is expected to produce additional consumer activity throughout the economy. In addition to cash …

How Stimulus Payments Are Treated For Tax Purposes – Tax Planning

With over 160 million stimulus payments sent with the first round of pandemic relief efforts, many in receipt of the payments are asking whether the payments are taxable or not. The IRS has clearly stated that stimulus payments, regardless of income or status, are not taxable.  For those that did not receive a stimulus payment in 2020 but believe that …