www.bloomberg.com - Bernie Sanders Could Be the Stock Market's Best Friend. If elected president, he would most likely expand the deficits that have buoyed corporate earnings and equities.
And while Sanders would seek to reverse Trump's policies, lower taxes and deregulation haven't contributed much to the bull market, either. Most of the earnings growth that fueled higher stock prices was already in the books when Trump's tax cuts took effect in 2018. Also, many of the regulations targeted by the administration focus on the energy sector, which has struggled to grow earnings at all since the 2008 financial crisis.
An explanation that deserves more attention is deficit spending. Governments have long used deficits to bolster economic activity, and the annual federal deficits since 2009 have been the highest on record. From 1970 to 2008 the average annual deficit was $129 billion. Since 2009, that average has jumped to $882 billion. More than any other single factor, that spike in deficit spending most likely fed the earnings growth behind this bull market.
If you think deficits are high now, just wait for President Sanders. His expensive wish list includes health care, housing and college for all, not to mention Green New Deal. Sure, some of the money may come from higher taxes, but no one doubts that much of it will be added to the nation's debt. One estimate pins the cost of Sanders's proposals at up to $97.5 trillion.
Stephanie Kelton, an economic adviser to the Sanders campaign, told Bloomberg TV recently that the U.S. could "safely increase the deficit, let's say by another $500 billion or so, before we begin to see inflation accelerating to something that we would consider problematic." Kelton has become the public face of Modern Monetary Theory, which posits that the U.S., can accumulate as much debt as it wants as long as inflation remains in check. Not surprisingly, the theory is increasingly popular with progressives who support big, Bernie-esque initiatives.
Additional deficits of $500 billion a year probably wouldn't be enough to pay for Sanders's proposals, so expect a Sanders administration to push MMT to its limits.
There may be more than one "King of Debt" or "Queen of Debt" - why worry, be happy and spend, spend, spend - it keeps the market up and people think they are getting richer... for a while.
www.foxbusiness.com - Many Americans run out of money before payday, survey finds. Financial stress is a reality for 42% of American workers, regardless of age, income or background
People at the lowest income levels experience the most stress (50 percent of people who earn less than $15,000 and 49 percent of people who make between $15,000 and $25,000). However, the third-highest percentage of people who experience financial stress (47 percent) are people who make between $130,000 and $200,000.
A big factor in financial stress is running out of money before payday, which happens to 32 percent of workers regularly.
At the lowest end of the income spectrum, about 40 percent of people who make less than $15,000 annually and 40 percent of people who make between $15,000 and $25,000 annually run out of money before payday. However, 32 percent of people who make more than $200,000 also run out of money before payday.
Of course, people still have to make ends meet, so many people take out 401(k) loans or payday loans or just use a credit card and carry the balance over to the next month. 46 percent of workers who carry over their credit card balance have more than $3,000 on their cards.