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STA Weekly Report – Will US Consumers Keep the Economy on Track?

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INSIDE THIS EDITION:

Will US Consumers Keep the Economy on Track?
Weekly Snapshot of Global Asset Class Performance
Caring for Aging Parents
401k Plan Manager

These dynamics also have investors wondering whether the US economy is a step closer to the next recession. The answer may largely depend on US consumers, whose spending power makes up two-thirds of US GDP.

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The labor market remains strong with more job openings than unemployed persons. The unemployment rate is comfortably sitting at 3.7%, a multi-decade low not seen since 1969.

And the job market is likely to stay tight. Small businesses that employ almost half of the country’s total workforce remains optimistic over future hiring plans, which has historically translated to a low unemployment rate.

Although wage growth momentum has cooled, the pace of growth is still near post-crisis highs and well above CPI inflation. Solid wage growth boosts confidence of US consumers, who, in turn, support the continued growth of US retail sales.

Thanks to lower interest rates, mortgage applications have recovered from its 2018 trough. This should support the housing sector, which is a sizeable component of US GDP.

In contrast to the financial crisis, US consumers own a much healthier balance sheet today. The household debt service ratio is at a multi-year low. While consumers remain optimistic, they spend wisely and in a sustainable way. A stronger balance sheet also allows consumers to borrow if needed, which can provide a cushion during the next economic downturn.    

Overall, US consumers are still in good shape, which should help keep the economy on track and muddling through a period of slower growth. 


Weekly Global Asset Class Performance

Although markets have not exhibited dramatic spikes in downward volatility during 2019, that does not mean that volatility will remain subdued indefinitely.

If you have any questions, please feel free to email me at luke@stawealth.com.

Luke

STA Investment Leadership Team

Luke Patterson, CEO & Chief Investment Officer
Andrei Costas, Senior Investment Analyst 
Nan Lu, Senior Investment Analyst

Caring of Your Aging Parents

By Scott A. Bishop, MBA, CPA/PFS, CFP

Mom? Dad? We need to talk

Later this month I will be hosting a very important episode of the STA Money Hour with author and Journalist Cameron Huddleston.  I have been interviewed by and hosted past STA Money Hour shows with Cameron in the past on “Money Worries”.  This issue is near and dear to me as I have had to deal with this issue with many of my personal family members.

Cameron recently wrote a book called “Mom and Dad We Need to Talk – How to Have Essential Conversations with your Parents About their Finances” – I would encourage all of you to check out her book (in the prior link).

Caring for your aging parents is something you hope you can handle when the time comes, but it’s the last thing you want to think about. Whether the time is now or somewhere down the road, there are steps that you can take to make your life (and theirs) a little easier. Some people live their entire lives with little or no assistance from family and friends, but today Americans are living longer than ever before. It’s always better to be prepared.

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Mom? Dad? We need to talk

The first step you need to take is talking to your parents. Find out what their needs and wishes are. In some cases, however, they may be unwilling or unable to talk about their future. This can happen for a number of reasons, including:

  • Incapacity
  • Fear of becoming dependent
  • Resentment toward you for interfering
  • Reluctance to burden you with their problems

If such is the case with your parents, you may need to do as much planning as you can without them. If their safety or health is in danger, however, you may need to step in as caregiver. The bottom line is that you need to have a plan. If you’re nervous about talking to your parents, make a list of topics that you need to discuss. That way, you’ll be less likely to forget anything. Here are some things that you may need to talk about:

  • Long-term care insurance: Do they have it? If not, should they buy it?
  • Living arrangements: Can they still live alone, or is it time to explore other options?
  • Medical care decisions: What are their wishes, and who will carry them out?
  • Financial planning: How can you protect their assets?
  • Estate planning: Do they have all of the necessary documents (e.g., wills, trusts)?
  • Expectations: What do you expect from your parents, and what do they expect from you?

Preparing a personal data record

Once you’ve opened the lines of communication, your next step is to prepare a personal data record. This document lists information that you might need in case your parents become incapacitated or die. Here’s some information that should be included:

  • Financial information: Bank accounts, investment accounts, real estate holdings
  • Legal information: Wills, durable power of attorneys, health-care directives
  • Funeral and burial plans: Prepayment information, final wishes
  • Medical information: Health-care providers, medication, medical history
  • Insurance information: Policy numbers, company names
  • Advisor information: Names and phone numbers of any professional service providers
  • Location of other important records: Keys to safe-deposit boxes, real estate deeds

Be sure to write down the location of documents and any relevant account numbers. It’s a good idea to make copies of all of the documents you’ve gathered and keep them in a safe place. This is especially important if you live far away, because you’ll want the information readily available in the event of an emergency.

Where will your parents live?

If your parents are like many older folks, where they live will depend on how healthy they are. As your parents grow older, their health may deteriorate so much that they can no longer live on their own. At this point, you may need to find them in-home health care or health care within a retirement community or nursing home. Or, you may insist that they come to live with you. If money is an issue, moving in with you may be the best (or only) option, but you’ll want to give this decision serious thought. This decision will impact your entire family, so talk about it as a family first. A lot of help is out there, including friends and extended family. Don’t be afraid to ask.

Evaluating your parents’ abilities

If you’re concerned about your parents’ mental or physical capabilities, ask their doctor(s) to recommend a facility for a geriatric assessment. These assessments can be done at hospitals or clinics. The evaluation determines your parents’ capabilities for day-to-day activities (e.g., cooking, housework, personal hygiene, taking medications, making phone calls). The facility can then refer you and your parents to organizations that provide support.

If you can’t be there to care for your parents, or if you just need some guidance to oversee your parents’ care, a geriatric care manager (GCM) can also help. Typically, GCMs are nurses or social workers with experience in geriatric care. They can assess your parents’ ability to live on their own, coordinate round-the-clock care if necessary, or recommend home health care and other agencies that can help your parents remain independent.

Get support and advice

Don’t try to care for your parents alone. Many local and national caregiver support groups and community services are available to help you cope with caring for your aging parents. If you don’t know where to find help, contact your state’s department of eldercare services. Or, call (800) 677-1116 to reach the Eldercare Locator, an information and referral service sponsored by the federal government that can direct you to resources available nationally or in your area. Some of the services available in your community may include:

  • Caregiver support groups and training
  • Adult day care
  • Respite care
  • Guidelines on how to choose a nursing home
  • Free or low-cost legal advice

Once you’ve gathered all of the necessary information, you may find some gaps. Perhaps your mother doesn’t have a health-care directive, or her will is outdated. You may wish to consult an attorney or other financial professional whose advice both you and your parents can trust.


Important Disclosure:
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by STA Wealth Management, LLC), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from STA Wealth Management, LLC. Please remember to contact STA Wealth Management, LLC, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. STA Wealth Management, LLC is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the STA Wealth Management, LLC’s current written disclosure statement discussing our advisory services and fees continues to remain available upon request.

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