THE BIG PICTURE WITH JEFF BRAYTON
“The harsh truth is that the market is amoral and largely apolitical. Most people have been better off financially if they disregarded politics entirely.”
The question Mark and I have heard more than any other this year is “Should we be doing anything different with the election coming this November?” Now with the election thankfully right around the corner, we continue to answer this question as we have in past years.
While the outcome of elections are incredibly important, the impact on the economy and markets is generally minimal and difficult to predict.
We included the chart below in our 2024 MidYear Economic and Market Update:
Source: BEA, Standard & Poor’s, FactSet, J.P. Morgan Asset Management. Data is calendar year. Guide to the Markets – U.S. Data are as of February 29, 2024.
Jeff Sommer Author and Journalist
If you don’t love charts and graphs, I’ll give you a quick summary: The US economy and financial markets have done very well regardless of election outcomes. We realize this flies in the face of the conventional wisdom that Republicans are good for the economy and Democrats are bad. Trust me, we receive a lot of befuddled looks when we share this information.
We have several other charts that drill down even deeper into the market’s performance during specific administrations all the way back to the 1920s, and they all tell the same story. It’s neatly summarized in a quote I heard at a conference many years ago: “Presidents don’t make markets, markets make Presidents.”
This year has, for the most part, followed election year patterns of the past. Given the odds of a delayed election result this year due to mail-in voting and the possibility of legal challenges in various states, it wouldn’t be surprising to see higher volatility in the coming weeks. History tells us that, once we are past the election cycle, the market will refocus on fundamentals like interest rates and corporate profits. Mark and I remain consistent in designing and adjusting your portfolio based upon facts and data rather than the noise and bluster of politicians and pundits.
Unfortunately, while election years do not tend to have much of an economic impact in our country, they do often become negative and contentious. This pessimism can get the best of any of us, so I want to end my section with a positive message for you. It comes from Warren Buffett’s 2016 letter to Berkshire Hathaway Shareholders:
One word sums up our country’s achievements: miraculous. From a standing start 240 years ago — a span of time less than triple my days on earth — Americans have combined human ingenuity, a market system, a tide of talented and ambitious immigrants, and the rule of law to deliver abundance beyond any dreams of our forefathers.
March 18, 2019
Martin & Marsha Lynch 43347 Nebel Trl Clinton Twp MI 48038-2465
You need not be an economist to understand how well our system has worked. Just look around you. See the 75 million owner-occupied homes, the bountiful farmland, the 260 million vehicles, the hyper-productive factories, the great medical centers, the talent-filled universities, you name it – they all represent a net gain for Americans from the barren lands, primitive structures and meager output of 1776. Starting from scratch, America has amassed wealth totaling $90 trillion.
Dear Martin & Marsha:
I love sending WorthWhile mix of cultural, financial and latest edition of Raymond James’
The Spring edition takes us guide for surviving in just about planning.
This success story is not due to any president or party. It occurred not in a straight line, but almost equally during Republican and Democratic administrations. You can expect each party to claim credit for economic success and to blame each other for failure — some things never change. We share Mr. Buffett’s amazement at the accomplishments of the United States as well as his optimism for the future
Many of my friends tell me everyone, and I believe there thoughts when you can. I always
Sincerely,
Jeffrey Brayton Financial Advisor Branch Manager
FINANCIAL PLANNING WITH MARK ROMIN
“Government is not a generator of economic growth; working people are”.
Phil Gramm
American
economist and politican
Birth Rates and the Economy
It is no secret that raising kids in 2024 is an expensive endeavor. According to a 2022 analysis done by the Brookings Institution, a middle-income family earning from $73,100 to $132,600 will spend an estimated $310,605 –or just over $18,000 a year – to raise a child born in 2015 through age 17. This doesn’t even include college or anything beyond.
Certainly, inflation is one factor driving up the cost, but societal changes and expectations have done their part to pile onto the expense. Parents across all incomes spend more today than ever before on raising kids. Wealthier families spend more on an absolute basis, while lower income families spend more on a percentage basis.
With all of this in mind, it likely comes as no surprise that birth rates have hit the lowest level on record at 1.62 births per woman in the U.S., according to data from the Centers for Disease Control and Prevention. This compares to the 100-year peak in the 1950s of about 3.7 births per woman (Baby Boomers). To maintain population growth, the rate needs to increase to an estimated 2.1 births per woman. While lower birth rates don’t guarantee an economic slowdown, it certainly increases the
probability. Lower birth rates could lead to labor market shrinkage, and thus constrain both consumption as well as tax revenue. According to economists at The Conference Board, this expected contraction in labor force could reduce U.S. gross domestic product (GDP) from 1.2% in the decade leading up to 2019 to a mere 0.3% in the decade ending in 2036.
When the ratio of workers to retirees declines and production levels fall, GDP growth tends to fall with it.
In this upcoming election, both political parties have outlined proposals to encourage higher birthrates through various child tax credit incentives. It remains to be seen if this will be enough to overcome the financial challenges facing young couples today.
At our mid-year economic update, Jeff and I covered a slide illustrating the demographic shift in U.S. population comparing 1900 to 2020. The slide below reveals the aging demographic from oldest to youngest in 1900 compared to 2020. The first is a perfect pyramid shape revealing a dwindling population as age increases while the latter showcases a population equally divided from ages 0-75.
At that meeting we made the case, hopefully convincingly, that the U.S. has one major factor
FINANCIAL PLANNING WITH MARK ROMIN
working in its favor to offset this population challenge — Aritificial Intelligence (AI), which plays a tremendous part towards increased productivity. The popularity of utilizing AI could not have come at a better time.
Immigration was another key topic at the meeting, as it is a major factor in offsetting the
population challenge. We know this is a very controversial subject — especially during this political season — however, we believe healthy documented immigration has and will remain a backbone for continued economic growth in the U.S.
In August our team headed downtown for lunch and to catch a Tigers game. This was around the beginning of the team’s winning streak, which helped them land in the playoffs. Their streak ended in the playoffs, but it was still a great season.
Mark your calendars for December 4 for our annual Holiday Party at Assumption Cultural Center. Tina and Sarah have been coordinating the details — music, gifts, prizes, and the return of the popular photo booth. We hope you can join us.
Many clients and friends have been impacted by the recent storms in southern states — our
Over the past couple of months we have been transforming our conference room from a sterile feeling law library to a warmer space with books we hope you and others we work with might be interested in reading. We hope to have the project completed by year end, and if you are looking for a place to unload books from your house, we have the perfect home for them!
hearts go out to all who have been affected by them. Our team donated to an agency that provides food, water, shelter, and recovery planning.
Thank you for reading our newsletter and for your continued trust and confidence.
Jeff Mark Pat Tina Sarah
TEAM UPDATES
Courtney and I loved our 20-year
Emma is heading to the West side next year to attend GVSU. Let the tears begin
Dinner
Tina Houle
Pat Johnson
Sarah Rangstrom
Soaking up the last bit of boating this summer
Family photo while working the Metro Boat Show
Running the Chicago Marathon. Stopped at charity mile 15 for a quick photo
Playtime with the grandkids is my favorite time.
Browns on Harsens Island. Annual ladies weekend in September
Tim taking a short break in Michigan
Lauren visiting from Boston with Mary Ellen at Eastern Market
at Big Boy with my daughter Danielle
anniversary trip to Europe. The Louvre in Paris was incredible.
23201
Lakeshore Financial Planning Inc. is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. Registration as an investment adviser does not constitute an endorsement of the firm by the SEC nor does it indicate that the adviser has attained a particular level of skill or ability. Lakeshore Financial Planning Inc. is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Content should not be construed as personalized investment advice or as an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned. Content should not be regarded as a complete analysis of the subjects discussed. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio. Past performance may not be indicative of future results.
Charts and indices do not represent the performance of Lakeshore Financial Planning Inc. or any of its advisory clients. Historical performance results for investment indexes and/or categories, are provided for illustrative purposes only, and generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would decrease historical performance results. There are no assurances that an investor’s portfolio will match or outperform any particular benchmark. Information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Expressions of opinions are as of this date and are subject to change without notice. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
Please be certain to contact Lakeshore Financial Planning anytime there is a material change to your financial situation or investment objectives, or if you wish to impose any reasonable restrictions on the management of your portfolio.