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“Great Recession”
14 Challenging Trends:
America’s Financial Future
Great Depression
Great Recession
- Began in United States with stock market crash October 29, 1929
- 2008 through . . .
- Lasted approx. 10 years
- Unemployment in U.S. reached 25%
- A ‘new norm’ of ‘endless’ recession
- Unemployment in Nov 2009 – 10.2%
1. ‘Great Recession’
Real Estate Values
14 Challenging Trends:
America’s Financial Future
Great DepressionNational 5 YearHome Value Decrease –
Great RecessionNational 4 YearHome Value Decrease – Mortgage Holders withHome Values less thanMortgage Balance – Wikipedia – www.zillow.com as of Nov 2010
25.9%
25%
23.2%
1. ‘Great Recession’2. Real estate values
Health Care Costs
14 Challenging Trends:
America’s Financial Future
Prior to creation ofMedicaid and Medicare in 1965
Since 1965
Slightly higher
Health Care Inflation
230% higher
Overall Inflation
Wall Street JournalOctober 20, 2008http://online.wsj.com/article/SB10001424052748703746604574461610985243066.html
1. ‘Great Recession’2. Real estate values3. Health care costs
Public Education
14 Challenging Trends:
America’s Financial Future
1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education
Energy Dependence
14 Challenging Trends:
America’s Financial Future
1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education5. Energy Dependence
Great Retirement Options
14 Challenging Trends:
America’s Financial Future
Pension Plans In 1980
Social SecurityBenefits as a %of contribution
82%
by 2014
In 2010 11%
401(k)contributions As a % of incomeNever been lower
1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education5. Energy Dependence
6. Pensions, Soc sec, 401(k)
Entitlement Programs
14 Challenging Trends:
America’s Financial Future
1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education5. Energy Dependence
6. Pensions, Soc sec, 401(k)7. Entitlements
Federal Budget Deficits
14 Challenging Trends:
America’s Financial Future
1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education5. Energy Dependence
6. Pensions, Soc sec, 401(k)7. Entitlements8. Budget deficits
Aging Parents
14 Challenging Trends:
America’s Financial Future
1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education5. Energy Dependence
6. Pensions, Soc sec, 401(k)7. Entitlements8. Budget deficits9. Aging parents
Workers will not retire
14 Challenging Trends:
America’s Financial Future
1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education5. Energy Dependence
6. Pensions, Soc sec, 401(k)7. Entitlements8. Budget deficits9. Aging parents
10. Workers will not retire 1980
Retire at age 65?
14%
2010 75%
Debt levels still high
14 Challenging Trends:
America’s Financial Future
1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education5. Energy Dependence
6. Pensions, Soc sec, 401(k)7. Entitlements8. Budget deficits9. Aging parents
10. Workers will not retire11. Debt levels
Taxes will increase
14 Challenging Trends:
America’s Financial Future
1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education5. Energy Dependence
6. Pensions, Soc sec, 401(k)7. Entitlements8. Budget deficits9. Aging parents
10. Workers will not retire11. Debt levels12. Taxes
Adult children ‘obligations’
14 Challenging Trends:
America’s Financial Future
1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education5. Energy Dependence
6. Pensions, Soc sec, 401(k)7. Entitlements8. Budget deficits9. Aging parents
10. Workers will not retire11. Debt levels12. Taxes
13. Adult children ‘obligations’
‘Away from home missions’
1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education5. Energy Dependence
6. Pensions, Soc sec, 401(k)7. Entitlements8. Budget deficits9. Aging parents
10. Workers will not retire11. Debt levels12. Taxes
13. Adult children ‘obligations’14. ‘Away from home missions’
14 Challenging Trends:
America’s Financial Future
Purging inefficient prosperity
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity
Real estate more affordable
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
Corporate profits and cash are strong
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
Salt Lake Tribune – Nov 16, 2010
. . . and they are investing!
Diversification and allocation worked
America’s Financial Future
ALLOCATION
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong4. Diversification and allocation worked
http://www.advisorone.com/article/ibbotson-argues-asset-allocation-diversification-still-valid
Still low inflation and interest rates
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong4. Diversification and allocation worked5. Resistance to inflation, interest rates
http://reason.com/archives/2009/11/17/wheres-that-inflation
America’s Financial Future
Regenerative Medicine – grow new cells and organsMolecular disease diagnosisGenome/DNA risk tolerance profilingAnti-aging medications
• Medicine
Extraordinary advances in:
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong4. Diversification and allocation worked5. Resistance to inflation, interest rates
America’s Financial Future
• Medicine
Extraordinary advances in:
• Energy Efficiencies
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong4. Diversification and allocation worked5. Resistance to inflation, interest rates
America’s Financial Future
• Medicine
Extraordinary advances in:
• Energy Efficiencies• Transportation
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong4. Diversification and allocation worked5. Resistance to inflation, interest rates
America’s Financial Future
• Medicine
Extraordinary advances in:
• Energy Efficiencies• Transportation• Education
FACTS/INFORMATIONKNOWLEDGE/UNDERSTANDING
WISDOM/APPLICATIONIMAGINATION/CREATIVITY
VISION/INSPIRATION
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong4. Diversification and allocation worked5. Resistance to inflation, interest rates
America’s Financial Future
• Medicine
Extraordinary advances in:
• Energy Efficiencies• Transportation• Education
• Information Systems
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
4. Diversification and allocation worked5. Resistance to inflation, interest rates
More high income earnersHigher expectations
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners
4. Diversification and allocation worked5. Resistance to inflation, interest rates
You will live longer and healthier
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
4. Diversification and allocation worked5. Resistance to inflation, interest rates
http://www.foxnews.com/health/2010/05/12/pill-help-live-past-available-years/
http://singularityhub.com/2010/03/08/get-ready-to-live-past-100/
Larger inheritances
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances
4. Diversification and allocation worked5. Resistance to inflation, interest rates
http://www.bmo.com/pdf/mf/prospectus/en/09-429_Retirement_Institute_Report_E_final.pdf
The ‘2030 Pension’Reverse Mortgages
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
4. Diversification and allocation worked5. Resistance to inflation, interest rates
Government ‘bailouts’have ‘worked’
http://www.propublica.org/special/government-bailouts
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
11. ‘Government bailouts’ have worked
4. Diversification and allocation worked5. Resistance to inflation, interest rates
Workforce assimilation• Agrarian
• Computer displacement• Two income families• Services• Manufacturing• Industrial
• International relocation• International outsourcing• Immigration
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
11. ‘Government bailouts’ have worked12. Amazing workforce assimilation
4. Diversification and allocation worked5. Resistance to inflation, interest rates
AmericanDemographics
America’s Financial Future
100 Million New Workersby 2050
Highest birthratesImmigration
Among advanced countries America will emerge by midcentury as the most affluent, culturally rich, and successful nation in
human history
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
11. ‘Government bailouts’ have worked12. Amazing workforce assimilation
4. Diversification and allocation worked5. Resistance to inflation, interest rates
13. 2050 – 100 Million More
Often successful
Sacrificed everything
Better life for families
Live very frugally
Well documented resourcefulness
Pay taxes while here
American:• Creativity• Imagination• Resourcefulness• insight and . . .
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
11. ‘Government bailouts’ have worked12. Amazing workforce assimilation
14. Creativity, imagination and resourcefulness
4. Diversification and allocation worked5. Resistance to inflation, interest rates
13. 2050 – 100 Million More
Higher educationskilled workforce
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
11. ‘Government bailouts’ have worked12. Amazing workforce assimilation
14. Creativity, imagination and resourcefulness
4. Diversification and allocation worked
15. Higher education – skilled workforce
5. Resistance to inflation, interest rates
13. 2050 – 100 Million More
Likely new tax• Federal Sales
• Value-added• Consumption
• Transaction
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
11. ‘Government bailouts’ have worked12. Amazing workforce assimilation
16. Strong population demographics
14. Creativity, imagination and resourcefulness
17. ‘Transaction tax’
4. Diversification and allocation worked
15. Higher education – skilled workforce
5. Resistance to inflation, interest rates
13. 2050 – 100 Million More
American economyHAS to grow
America’s Financial FutureStephen J. Rose• Research Professor at Georgetown
University• Senior Advisor to Robert Reich
Secretary of Labor
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
11. ‘Government bailouts’ have worked12. Amazing workforce assimilation
16. Strong population demographics
14. Creativity, imagination and resourcefulness
17. ‘Transaction tax’18. The American economy has to grow
4. Diversification and allocation worked
15. Higher education – skilled workforce
5. Resistance to inflation, interest rates
13. 2050 – 100 Million More
American economystill the world leader
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
11. ‘Government bailouts’ have worked12. Amazing workforce assimilation
16. Strong population demographics
14. Creativity, imagination and resourcefulness
17. ‘Transaction tax’18. The American economy has to grow
4. Diversification and allocation worked
19. American economy still world leader
15. Higher education – skilled workforce
5. Resistance to inflation, interest rates
13. 2050 – 100 Million More
http://www.sltrib.com/csp/cms/sites/sltrib/pages/printerfriendly.csp?id=50640829
America: the Crossroads Nation
New financialmarket regulations
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
11. ‘Government bailouts’ have worked12. Amazing workforce assimilation
16. Strong population demographics
14. Creativity, imagination and resourcefulness
17. ‘Transaction tax’18. The American economy has to grow
4. Diversification and allocation worked
19. American economy still world leader 20. New financial market regulations
15. Higher education – skilled workforce
5. Resistance to inflation, interest rates
13. 2050 – 100 Million More
http://www.brookings.edu/opinions/2010/0716_financial_reform_elliott.aspx
‘Armaggedon’?
America’s Financial Future
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
11. ‘Government bailouts’ have worked12. Amazing workforce assimilation
16. Strong population demographics
14. Creativity, imagination and resourcefulness
17. ‘Transaction tax’
21. Armaggedon?
18. The American economy has to grow
4. Diversification and allocation worked
19. American economy still world leader 20. New financial market regulations
15. Higher education – skilled workforce
5. Resistance to inflation, interest rates
13. 2050 – 100 Million More
22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable
3. Corporate profits and cash strong
6. Extraordinary advancesMedicine, energy, transportation, education, information systems
7. High income earners8. You will live longer and healthier
9. Larger inheritances10. Home equity – the next pension
11. ‘Government bailouts’ have worked12. Amazing workforce assimilation
16. Strong population demographics
14. Creativity, imagination and resourcefulness
17. ‘Transaction tax’
21. Armaggedon?
18. The American economy has to grow
4. Diversification and allocation worked
19. American economy still world leader 20. New financial market regulations
15. Higher education – skilled workforce
5. Resistance to inflation, interest rates
America’s Financial Future
Latter-day-Saintstrengths
• Welfare system
• Financially strong• Missionary disciplined• Highly organized• Multi-lingual• Highly educated
• Daily seminary trained• International presence• Perpetual education fund• Genealogical records
22. LDS Strengths
13. 2050 – 100 Million More
We must have faith in the future regardless of the ultimate eventualities. One of the greatest calamities in this world would be the calamity of sitting down and waiting for calamities. We must not let the things we can’t do keep us from doing the things we can do. We must not let remote possibilities or even imminent probabilities keep us from moving forward with all earnestness and all effort.I should like to say to the young people of this generation that they too must have faith in the future. In spirit of all the uncertainties, they must go forward and prepare themselves as best they can for all the problems and opportunities of life. Whatever may come here or hereafter, the future will always be better for those who are best prepared.“No generation has ever lived without facing uncertainty. If those who faced the uncertainties of ten or twenty-five or fifty years ago had sat by and waited for what seemed to them to be imminent calamities, we should not have had the able and ready and well-qualified men that we have today, and that we need and shall need in the next generation. Richard L. Evans 1950
America’s Financial Future
Wilford WoodruffI would live as if it [the end of time] were to be tomorrow—but I am still planting cherry trees!
I am not afraid of tomorrow, for I have seen yesterday, and I love todayWilliam Allen White
America’s Financial Future
15 Inspiring Trends:
1. ‘Great Recession’ – purging inefficient prosperityIn the middle of every difficulty lies opportunity – Albert
Einstein2. Real estate desperately needed to adjust – ‘brilliant
idiocy’ and ‘irrational exuberance’ altered dramatically3. Corporate profits are strong, cash is at highest levels, we
can endure a second dip – this is the ultimate driver of stock values
4. Health care – extraordinary advancesEnergy utilization, transportation, education,
information systems5. Middle class shrank – far more higher income
opportunities6. You will live much longer and healthier than your
parents7. Larger inheritances than your parents or grandparents8. Home equity – a large tool for retirement income9. History of ‘government bailouts’ – more positive than
most realize10.The workforce amazingly absorbed:
Shifts from agrarian, industrial and manufacturing economies; two income families; computer displacement; international corporate relocations and outsourcing; and documented and undocumented immigrants
11.Population growth demographics of America stronger than any other nation
12.Creativity, imagination, vision and resourcefulness – stronger in America than anywhere
13.Tax increase will come in ‘transaction tax’14.Armeggeden? Matthew 14, ‘New Jerusalem’, Luke 17 –
he feared15.The American economy has to grow and always has
America’s Financial Future