Friday Financial Five – April 18th, 2014
Friday, April 18, 2014
Thanks to higher tax rates and an improving economy, Fiscal Year 2014 is shaping up to be very good for everyone’s favorite government agency, the Internal Revenue Service. According to the Congressional Budget Office’s projections , receipts from October 2013 to March 2014 are $1,300 billion. That’s over $100 billion more than the same period in Fiscal Year 2013, or a roughly 10 percent increase. The extra revenue included a $92 billion increase in personal income tax withholdings, a $17 billion increase in corporate tax income, and $12 billion more in receipts from the Federal Reserve.
Colleges feeling the pinch
There are signs that the demand for college, replete with ever increasing costs and options, may be reaching a tipping point. In many areas, tuition rose over three times that of overall inflation in recent years and only recently shown any sign of a slowdown. This Bloomberg article details the growing trend of colleges that are being downgraded by Moody’s or closed altogether. For those institutions subject to downgrades or dwindling enrollment, the students face the real possibility of receiving a diploma from an institution that may not exist in the near future.
CPI sees a small increase
Speaking of inflation, as the story goes, the country will continue to experience depressed price increases in accordance with a stagnated recovery following the most recent recession. The recent Department of Labor numbers show a 0.2 percent increase in the Consumer Price Index for March. The cost of food and clothing was on the rise while gasoline decreased by almost 2 percent. Overall, there has been a 1.5% increase in prices year over year, still well below the historical average.
Employment numbers fail to impress
March’s employment numbers show total payrolls up 192,000 for the month. The unemployment rate remains stuck at 6.7%, but the positive news is that most of the gains were realized in the private sector. To really jump-start the recovery, the goal should be for 200,000 or more new jobs to be added each month. Each state’s primary focus should be removing barriers for small businesses to create and grow job numbers.
Genworth’s annual cost of long term care
Genworth, one of the country’s leaders in Long Term Care insurance, has produced the 2014 Cost of Care Survey. With just a quick glance, it’s apparent that care costs in the Northeast are trending much higher than the rest of the country, with the average private room in a Rhode Island or Massachusetts nursing home coming in at over $100,000 annually. The huge expense associated with caring for an aging population may drive more retirees to the Midwest. Why pay $130,000 annually for a private room in New York when you can get one in Oklahoma for $57,000?
Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected] .
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