My favorite chart. Link here. Down slightly. Decreased by $11 billion to $7.63 trillion.
Fed target: no longer useful. Link here. Getting ready for the new Fed chair. I never thought the "price-of-eggs-and-used-cars" should have been part of the equation. The price-of-eggs everyone understands; I've seen no one explain the price-of-used-cars. But isn't it amazing how the price of used cars has dropped since Trump has come into office? Everybody knows the Fed target would never be reached. The question is whether the Fed had another "wink-wink" target?
For the 25-year-old, an inflation rate of 4% vs 2% over time might be a real disaster, I don't know, but for the 75-year-old with stable housing costs (not yet in a nursing home) and seeing huge returns in investments and huge COLAs for Social Secuirty -- a high inflation target might be just what the doctor ordered. I don't know. That's why this is called "Saturday morning coffee hour at the local deli." My military pension is tied to the inflation rate and I've not been disappointed over the past twenty years.
Personal savings rate: this is interesting. Link here. Below the one-year graph. The three-year graph looks hideous. What is included in "personal savings"? It might surprise you. It always surprises me when I see the list.
To clear up one item, since a lot of folks consider a home part of their savings:
The official personal savings rate, as calculated by the U.S. Bureau of Economic Analysis (BEA), does not include money spent on homes and automobiles. It is defined as the percentage of disposable personal income that households do not spend on consumer goods and services, often regarded as income remaining after taxes and expense.
Again:
Purchasing a home or car does not directly increase the personal savings rate. It is calculated as disposable income minus spending; major purchases are treated as consumption or debt payments, not savings. While they increase net worth, only cash, investments, and principal repayments typically count as savings in this formula.
So, for all we know, people are cutting back on savings and investments to buy expensive houses and expensive cars.
So, perhaps a decline in the personal savings rate is very, very good for the economy, and over time, inflation will work in favor or those who are buying "expensive" homes and autos now. Buy now, and they won't need to be bought in the future.
Net worth. I find the average net worth of Americans not including real property much more interesting. Link here. This is CNBC data derived from government data; one may want to search source data.
Now, think about this: Dose average net worth include monthly payment from pension plans, Social Security, RMDs from IRAs, etc?
No, standard average net worth calculations do not include monthly income streams like Social Security or pension payments. Net worth measures accumulated assets minus liabilities, while pensions and Social Security are considered income, not capital. RMDs (Required Minimum Distributions) from IRAs are included, but only as part of the total IRA balance.
In other words, "net worth" as defined by the US government significantly underestimates the net worth of those over 65 years of age. In addition, Medicare premiums for seniors can be significant for those in upper income brackets, but in general, seniors should ave significantly less out-of-pocket medical costs than working families under the age of 65.
A retired postal clerk with Medicare, pension, RMDs from TSP, RMDs from other IRAs, could be doing a whole lot better than the chart above might imply.
I think it would interesting to see an analysis explaining why net worth decreases after age 74. That's counterintuitive but the quick answer will be long-term nursing care.
Car expenses as one ages. LOL. Those expenses practically disappear. My most recent numbers are posted here. I drive a 2012 Honda Civic bought in 2011:
- the car was paid off years ago; no monthly payments for years; it was probably paid off in 2016, ten years ago;
- insurance costs on a car this old are relatively trivial compared to a new car
- solid brand: almost no maintenance costs; only maintenance cost this year, a new tail light, driver's side; annual inspection -- maybe a new battery every three years; oil change; miscellaneous stuff;
- I re-fill the gasoline tank on average once a month; I have gone as long as 90 days between fill-ups
- every 30 days I pay about $30; it will be higher this month;
**********************************
Speaking of Gasoline Prices
I generally don't include my wife's gasoline expenses / mileage. I just worry about myself, but I think this is interesting and tells a story.
We finally had to donate to charity her perfectly-running Chrysler minivan this past year -- a 2005 model -- it couldn't pass Texas inspection due to a broken sensor that was no longer available -- not even on the secondary market --- we drove it for fiver years (maybe longer, I forget) without getting it registered because it wouldn't pass inspection. But it was in perfect shape otherwise, including a body that looked brand new. But even if it would have passed inspection, after 21 years of the same car, my wife really, really wanted a new car. So last year she got a new car which she absolutely loves.
She paid for the car in cash, something she (we) had never done before which goes back to my discussion above regarding the net worth of those over 74 years of age. Both of us are over the age of 74. Right now, our combined ages = 150 years of age.
So, here's her mileage. I don't always get the exact data from my wife, but the last several data points seem to be accurate -- she pays in cash, not a credit card, so, for example, she gives the attendant the amount of cash she thinks it will take to fill the thank, and sometimes gives the attendant slightly more than the actual amount.
Most surprising to me: the jump in improved mileage and the significant decline in cost-per-mile despite the price of gasoline going up significantly over the last few days.
The story here: the price of gasoline is important. But more important is one's driving habits.
My wife's cost per mile was 12 cents vs 20 cents last month despite the increased cost of gasoline.
