Political Calculations
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24 May 2024

How does your retirement savings compare against your demographic age group peers in the United States? If you've been wanting to answer that question, Niccolo Conte and Dorothy Neufeld of Visual Capitalist created a useful chart you can use to quickly find out how you compare with members of your age group who are saving for retirement.

The chart provides two key data points for several standard age brackets: the median and average retirement savings for Americans whose age falls within each. The savings data itself was compiled by the Federal Reserve in its 2022 Survey of Consumer Finances, which is the most recent year this data is available.

Of the two data points, the median retirement savings will provide the best indication of how you compare with your age group peers. Half of Americans within the indicated age groups will have more retirement savings than this amount, while the other half will have retirement savings below this number. Here's the chart:

The numbers in the chart represent only money that Americans have saved in dedicated retirement accounts and does not include any money saved or wealth accumulated in other kinds of savings and investment accounts. The most common types of these include the Individual Retirement Account (IRA), employer-sponsored 401(k) retirement savings plans, and nonprofit employer-sponsored 403(b) retirement savings plans.

The savings in these retirement savings accounts help fund Americans' life after work, which is also supported by benefits like Social Security. And of course, whatever other kinds of financial accounts or wealth Americans have accumulated when they reach retirement age.

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23 May 2024
An editorial cartoon of teenagers applying for jobs Image generated by Microsoft Copilot Designer.

The employment situation for U.S. teenagers dipped slightly in April 2024. The seasonally adjusted number of 16-19 year olds counted as having jobs decreased from the previous month's total by 23,000 (or 0.4%) to 5,839,000. That's just under a third of the entire population of U.S. teens in this age bracket.

Although it dipped, the jobs trend for older teens (Age 18-19) remains positive. The same however cannot be said of younger teens (Age 16-17), whose numbers among the employed have been generally declining since December 2022 and more sharply since January 2024.

These changes can be seen in the following paired set of charts, which track teen employment and the teen employment-to-population data from January 2016 through April 2024.

Each of the data series presented in these charts receives its own seasonal adjustment. Because of that, the numbers of working Age 16-17 year olds and Age 18-19 year olds won't necessarily add up to the totals shown for the combined Age 16-19 population. If you're looking for employment figures that do add up, you'll want to review non-seasonally adjusted data.

References

U.S. Bureau of Labor Statistics. Labor Force Statistics (Current Population Survey - CPS). [Online Database]. Accessed: 3 May 2024.

Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of teenagers applying for jobs".

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22 May 2024
A crystal ball with the word 'SP 500' written inside it (and 'Dividends' above it) - Image generated by Microsoft Copilot Designer.

Why have stock prices rallied so much during the past several months?

As it happens, there's a very fundamental answer to that question, provided you know how stock prices work, which is to recognize that changes in current-day stock prices are primarily driven by changes in the expectations about the future rate of growth of their underlying dividends per share.

If those expectations become more positive, that change can be expected to be accompanied by a rally in stock prices. If those expectations become more negative, then stock prices can be expected to fall. Either way, if you want to understand why stock prices behave as they do, you need to start with what the expectations for future dividends are doing.

That's why we pay close attention to quarterly dividend futures. Our regularly scheduled snapshot of the future for S&P 500 dividends per share for Spring 2024 comes at the end of the following animation, in which we reveal how the expectations of dividend growth through each quarter of 2024 has changed since we started tracking them at roughly monthly intervals in October 2023.

Animation: Past and Projected S&P 500 Quarterly Dividends Per Share Futures, 2021-Q4 Through 2024-Q4 | Snapshots from 13 October 2023 through 14 May 2024

Over the past two months, there have been two major positive dividend events, both involving companies whose market capitalizations gives them a heavy weighting in the S&P 500 (Index: SPX), neither of which had previously ever paid dividends. The first was Meta Platforms (NASDAQ: META), more popularly known as Facebook, who initiated its first dividend in early February 2024. The second came in the final week of April 2024 with Alphabet's announcement that the company formerly known as Google (NASDAQ: GOOG and NASDAQ: GOOGL) would start paying dividends.

Add in the conveyance effect and other dividend increase announcements and it's been good spring for the outlook for the S&P 500 dividends per share. It shouldn't be a surprise to find the index has rallied to record highs.

Here are the dates of the individual snapshots presented in the animated chart, with links to where we originally presented the data in them:

More About Dividend Futures Data

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarter's dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the now "current" quarter of 2024-Q2 began on Saturday, 16 March 2024 and will end on Friday, 21 June 2024.

That makes these figures different from the quarterly dividends per share figures reported by Standard and Poor. S&P reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

Image Credit: Microsoft Copilot Designer. Prompt: "A crystal ball with the word 'SP 500' written inside it". And 'Dividends' written above it, which we added.

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21 May 2024
A crystal ball with the word 'SP 500' written inside it (and 'Earnings' above it) - Image generated by Microsoft Copilot Designer.

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings.

Since our last update three months ago, expectations for the S&P 500's earnings have improved. The S&P 500's earnings per share had been expected to return to their March 2022 peak of $197.91 after June 2024, but now looks like it will hit that mark before the end of 2024-Q2.

Here is a summary of the major observations that may be seen in the changes of Standard & Poor's earnings projections from 14 February 2024 to 14 May 2024:

  • Earnings per share for 2023-Q4 increased from a projection of $189.74 to a finalized figure of $192.43.
  • Projected earnings for 2024-Q1 improved from $190.54 to $192.93 per share.
  • S&P projects faster earnings growth during the second half of 2024, improving from $217.99 to $218.13 per share by the end of the year.
  • The first projection of where the S&P 500's earnings per share will be at the end of 2025 is $251.91.

The following chart reveals how the latest earnings outlook has changed with respect to previous snapshots:

Forecasts for S&P 500 Trailing Twelve Month Earnings per Share, December 2017-December 2024, Snapshot on 14 May 2024

If you look at the historic earnings expectations shown on the chart, particularly the period since 2021, you'll notice a negative pattern in which later projections for earnings are less optimistic than the projections that preceeded them. This is the 'typical' pattern we see in these earnings projections.

About Earnings Recessions

Depending on who you talk to, an earnings recession has one of two definitions. An earnings recession exists if either earnings decline over at least two consecutive quarters or if there is a year-over-year decline over at least two quarters. The chart identifies the periods in which the quarter-on-quarter decline in earnings definition for an earnings recession is confirmed for both the Pandemic Earnings Recession (December 2020-December 2021) and the new earnings recession (March 2022-December 2022) according to the first definition. The regions of the graph shaded in light-red correspond to the full period in which the S&P 500's earnings per share remained below (or are projected to remain below) its pre-earnings recession levels.

Let's define what a "double-dip" earnings recession would be in case that becomes relevant at the time of our next update. This term describes the situation where after having begun to recover, the S&P 500's earnings per share stops rising and falls without having recovered to its pre-earnings recession level.

Our next snapshot of the index' expected future earnings will be in three months. With the improvement in the earnings outlook over the past three months, we should be able to confirm the full recovery from 2022's earnings recession. Then again, at the end of 2023, we didn't expect that recovery would stretch out as it has, so there is the possibility things will turn to be more negative.

Reference

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 14 May 2024. Accessed 15 May 2024.

Image Credit: Microsoft Copilot Designer. Prompt: "A crystal ball with the word 'SP 500' written inside it". And 'Earnings' written above it, which we added.

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20 May 2024
An editorial cartoon of a Wall Street bull celebrating the Dow Jones Industrial index hitting 40,000 Image generated by Microsoft Copilot Designer.

The S&P 500 (Index: SPX) set a new record high of 5,308.15 on Wednesday, 15 May 2024 before slipping back to close out the trading week that was at 5,303.27. The index rose a little over 1.5% about its previous week's close.

The momentum behind the move was provided by Federal Reserve Chair Jerome Powell, who assured markets the week's higher-than-expected producer price inflation report would not respond by hiking U.S. short term interest rates.

With that likelihood greatly reduced, investors sent all the major U.S. stock indices higher during the week. Most notably, the Dow Jones Industrial Average (Index: DJI) crossed above the 40,000 milestone, going on to end the week at 40,004.35.

Meanwhile, the trajectory of the S&P 500 took it to the upper end of the dividend futures-based model's projected range, which can be seen in the latest update to the alternative futures chart.

Alternative Futures - S&P 500 - 2024Q2 - Standard Model (m=+1.5 from 9 March 2023) - Snapshot on 17 May 2024

Other things happened during the trading week that ended on Friday, 17 May 2024. Here's our summary of the week's market moving headlines:

Monday, 13 May 2024
Tuesday, 14 May 2024
Wednesday, 15 May 2024
Thursday, 16 May 2024
Friday, 17 May 2024

The Atlanta Fed's GDPNow tool is forecasting an annualized real GDP growth rate of 3.6%, down from the +4.2% growth it projected in the previous week.

Image Credit: Microsoft Copilot Designer.. Prompt: "An editorial cartoon of a Wall Street bull celebrating the Dow Jones Industrial index hitting 40,000".

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About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

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