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Equity Update

Major domestic stock indices were essentially flat for the month of April after U.S. equities reached record levels not hit since July 2015, sending the Dow Jones Industrial Average to the 18,000 level.

Defensive stocks pulled back in April, a signal that buyers are less risk averse and leaning towards more aggressive growth company stocks. Other optimistic sector trends evolved in April as small caps, cyclicals, and multi-nationals outperformed more conservative large cap and defensive equities.

Some investors celebrated the seventh year of the bull market that began in March 2009. Even with the volatility and pullbacks over the 7-year period, it is still considered the second longest bull market in the market’s history.

Sources: Dow Jones, S&P, Bloomberg

Where Our Tax Dollars Go To – Fiscal Overview

For fiscal 2015, the federal government took in over $3.2 trillion in tax payments, a record year compared to previous fiscal years. The federal budget for fiscal year 2015 ran from October 1, 2014, to September 30, 2015. The total figure amounts to approximately $21,833 for every person in the United States.

Taxpayers often wonder, where does all their tax money go. The Office of Management & Budget breaks down where tax payments go each year, allowing Americans to see what they’re getting.

Source: Office of Management & Budget

International Review

China released economic data that showed exports were growing and that its GDP was heading higher. International analysts and economists tend to play down economic data released by the Chinese government due to perceived inaccuracies of what it releases.

Economic growth in the eurozone surpassed growth in the Unites States for the first quarter, a sign that central bank stimulus in Europe may be making some progress. The dollar’s recent slide against the euro was also an indicator that U.S. growth was stagnating relative to international markets.

Many economists believe that the central banks in Europe and Japan have held back on further stimulus efforts until financial conditions stabilize and their currencies regain some strength.

Sources: Eurostat, Bloomberg, Reuters

State Income Tax Rates – Tax Planning

Individual state income taxes are a major source of revenue for states, accounting for nearly 35% of state tax collections nationwide. Forty-three states currently impose a state income tax, in addition to a Federal income tax, with only seven states imposing no state tax at all.

As state and municipal finances have experienced unforeseen fiscal duress, many states have levied and plan to levy higher tax rates on their residents. The non-partisan, non-profit Tax Foundation founded in 1937 provides unbiased research and data on taxes imposed throughout the United States.

Individual state income tax rates not only affect individuals but also affect companies. As companies grow and hire staff for new locations, state tax rates can deter some companies from hiring in higher rate states. Some companies can pay less since an employee’s take-home pay might be higher should there be no state income tax.

Retirees also consider state tax rates when planning for retirement and reducing expenses. It’s no surprise that the seven states that have no state income tax are also popular living destinations for retirees.

Source: Tax Foundation

Wealthy Folks Tend To Be Healthier

What Countries Spend On Healthcare – Market Fact

The cost of healthcare is an important and growing issue internationally, not just in the United States. The health of a nation’s citizens is essential to its economic and social well being. The Organization for Economic Cooperation & Development (OECD) is an entity that has been closely monitoring health costs of countries worldwide. The OECD was formed in 1961 with the intent of promoting policies that will improve the economic and social status of people around the world. The OECD currently is made up of 34-member countries whose people and economics contribute to the international community.

In a recent report, the OECD reported that the United States spends 2 ½ times more on public and private healthcare costs than the average member country in the OECD. Healthcare expenses vary from country to country depending on various factors, such as availability of physicians, medical facilities, and diagnostic procedures. The OECD study found that the United States has more physicians, more medical facilities, more specialized procedures, and more drugs available to patients as compared to other OECD member countries.

The OECD also found that wealthier countries, such as the U.S. and the Netherlands, spend more on healthcare than poorer countries such as Turkey or Poland. It is believed that the U.S. spends more because of the ample services that are merely available for patients. Some suggest that more healthcare is not always better healthcare, such procedures as MRIs and CT exams, which may be considered unnecessary, but still performed.

As a percentage of Gross Domestic Product (GDP), the U.S. currently has the highest proportion relative to other OECD member countries. As of 2011 data, total healthcare expenditures in the U.S. were over 17% of GDP, versus 9.6% of the average OECD member country.

Sources: Organization for Economic Cooperation & Development

Rich Are Healthier

Researchers at the Urban Institute and Virginia Commonwealth University released a report in April examining the links between health, wealth, and income. For years poverty has often been associated with poor health, while the wealthiest have been thought of having fewer illnesses. To confirm these perceptions, the report analyzed various health problems for which the Centers for Disease Control (CDC) has recorded prevalence by family income. In every case, the wealthy are better off.

How health and money are related is complex. For both rich and poor, the two attributes likely reinforce one another. “Health and income affect each other in both directions: not only does higher income facilitate better health, but poor health and disabilities can make it harder for someone to succeed in school or to secure and retain a high-paying job,” the Urban authors write. Living in poverty often means less access to nutritious food or neighborhoods safe for outdoor exercise. Low-income people are more likely to smoke or be obese. White-collar jobs are less physically demanding, and people who have them can afford to take a day off for a doctor’s visit or to get a gym membership. They’re also probably not working the night shift, which is linked to cancer and other health problems.

Sources: Centers for Disease Control, Urban Institute & Virginia Commonwealth University