By Edward Leone Jr. CFP RFC MBA DMD
Contact Information: 303-478-6793 edleonedds@gmail.com
The election event has concluded. I am concerned that many issues facing the Federal Government were not addressed by either candidate in a significant fashion. Programs such as Social Security, Medicare and Medicaid are not sustainable into the future in their current form. It is little recognized that the national budget deficit is growing again after some declines in the last several years. For 2016 it is at $588 billion as compared to $439 billion for 2015. Total Federal budget deficits represent 77% of GDP. The 50 year historical average has been 39%. What is going on and when will steps be taken to reduce Federal spending? The Government is sucking financial resource out of the economy which can be used by industry, businesses and consumers to grow the economy. It will likely take 18 months to 24 months to see the outcomes of any initiatives generated by the newly elected Government in addressing these issues.
It is important to note that there have been several tax increases imposed by the IRS for 2016:
Medicare Tax 1.45% to 2.35%
Top Income Tax Bracket 35% to 39.6%
Capital Gains tax 15% to 28%
Dividend Tax 15% to 39.6%.
WOW!!!
As a result of Obama Care legislation, it is anticipated that health care cost will go up more than 30% in the next year or two. What next??
It is clear that we have seen a very steady economic cycle with very slight economic growth and an improve labor market to a minor extent. A part of the challenges faced have to do with strained global economic issues and extraordinary policies employed by foreign central banks. We may see some revitalization in the US economy as a result of difficulties faced by foreign competitors. Production costs in China are accelerating. Wages and political issues are creating head winds there. It is observed that energy cost are accelerating there also. Electricity costs in the US are 34% lower than in China and 50% lower than in Europe. The political climate here is much more stable than in China or Europe in spite of the presidential election circus we have witnessed. With an effort by our Federal Government to modify fiscal policy and regulation strategies, we may see the acceleration in economic growth which we normally see and have been expecting for these last 8 years.
It is still in my opinion, a reality to have a Thanks Giving for who we are and what we do!!
For The Record:
DJIA 18,589.69
S&P 500 2,163.26
NASDAQ 5,251.07
Suggested Reading: “The Intelligent REIT Investor” By Wiley
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