And, the Bureau of Labor Statistics
(BLS) said…
U.S. job growth surpassed
expectations in October. About 271,000 jobs were created across diverse
industries: professional and business services, health care, retail,
construction, and others. That was a
significantly higher number than predicted by economists who participated in a
survey conducted by The Wall Street
Journal. They expected to see 183,000 new jobs for October.
The BLS revised August and
September jobs numbers higher overall and reported improvement on the wage
front, too. Average hourly earnings increased by nine cents during October. For
the year, hourly earnings are up 2.5 percent. Rising wages and a 5 percent
unemployment rate “appear to indicate the labor market has reached full
employment,” reported Barron’s.
Strong employment data
supports the idea the Fed will begin to lift the Fed funds rate this year. On
Friday, former Chairman of the Federal Reserve Ben Bernanke wrote in his blog:
“Wednesday was something
of a trifecta for Fed watchers: Chair Yellen, Board Vice-Chair Stanley Fischer,
and Federal Reserve Bank of New York president Bill Dudley (who is also the
vice chair of the Federal Open Market Committee) all made public appearances.
Moreover, the comments by all three members of the Fed’s leadership explicitly
or implicitly supported the idea that a December rate increase by the FOMC is a
distinct possibility. (The possibility of a rate increase is even more distinct
with this morning’s strong job market report.)”
Markets responded swiftly,
according to The Wall Street Journal,
as investors repositioned their portfolios in anticipation of a rate hike.
While stock market indices remained relatively steady, there was considerable
volatility within certain sectors. An expert cited by the publication
commented:
“…one of the big rotation
trades on Friday was investors taking money out of companies such as utilities
and real-estate-investment trusts, and putting it into those that are expected
to benefit from higher rates, such as financial companies.”
it wasn’t just about the budget. Last week, the bipartisan
budget bill was signed into law, averting a U.S. default and deferring further
battle over debt and spending levels until presidential and congressional
elections are over, according to U.S.
News & World Report.
The
new law includes provisions that CBS
Money Watch said are likely to strengthen Social Security and Medicare by
improving the programs’ finances. Since the provisions also have the potential
to reduce benefits for some Americans, they may not prove to be all that
popular. Here are two of the changes that affect Social Security benefits:
·
File-and-suspend
strategies
will be limited in 2016. This change
could cost some Americans up to $50,000 in lifetime Social Security benefits,
according to PBS News Hour. The strategy
entails having a husband or wife file for Social Security benefits at full
retirement age and then suspend the benefits immediately. This allows a spouse to
claim a spousal benefit, while the husband or wife receives delayed retirement
credits.
Effective May 1, 2016, no one will be able to voluntarily file
and suspend benefits to make a spousal benefit available to a spouse or to protect
the right to file for retroactive benefits.
·
Restricted application
strategies will not be an option after 2015. Restricted application also is a Social
Security claiming strategy. It allows an applicant to receive spousal benefits
while earning delayed retirement credits until age 70. Americans who meet age
requirements in 2015 can employ the strategy; younger Americans cannot.
If
you are currently employing these strategies, you are probably grandfathered.
We’ll know more when the Social Security Administration offers some insight as
to how the new rules will be interpreted. That’s expected to happen before the
end of the year. In the meantime, if you have questions about how this may
affect your retirement plans, please contact your financial advisor.
Weekly Focus – Think About It
“The easiest thing to be
in the world is you. The most difficult thing to be is what other people want
you to be. Don't let them put you in that position.”
--Leo
Buscaglia, American
author and motivational speaker
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