Back to School Season Should
Scare You
Rodney Johnson | August 29, 2019 | It's that time again – back to school season – when we have to drive a little slower, watch for flashing yellow signs that signal much higher ticket costs, put down our cell phones, and try to remember the rules on when to stop for school buses (always on your side of the road and, if the bus is facing you, when the road doesn't have a median). But those things aren't scary, they're just good safety precautions. The worrisome parts are costs and headcount. On the money side, it's all about college. I know the mainstream reasons why college is expensive, including higher demand, pay for personnel, easily accessible student loans, etc. But I think there are other, hidden reasons. College is expensive in part because we as parents are willing to pay so much to get our kids out of the house. I know this, because I'm living it. My two older children are out of college by two and three years, respectively. We just have the last one left. The finish line is so close I can see it. But then, the universe intervenes: Her college career will take an extra year. And it will be expensive. My daughter transferred universities, adding on the time and moving out of state. The tuition/fees/add-ons total for just the fall semester are $17,035. This is a state school, and definitely in the middle of the pack in terms of cost. And that doesn't include books or living expenses, or travel costs. We prepaid a portion, so we won't take the full hit, at least not until her extra year, which I didn't plan for when she was two years old. Silly me. As for headcount, it's related to college costs as well as other expenses. The Rising Cost of Everything While I'm shelling out what I think of as big bucks for an out-of-state public university, new parents are coughing up $1,000 per month for daycare. Like me, they have a window of expense which ends when the little one goes off to kindergarten, but then they have the looming cost of college just over a dozen years away after that. And Heaven help them if they want to buy a home in between. If those same young parents took on some of the cost of their higher education with student loans, then chances are they're making those payments at the same time as having kids and putting down roots. The entire situation starts to feel like a financial trap, and goes a long way to explain why the birth rate among women of child-bearing age has dropped to an historical low of 1.7 kids, not even enough to replace both parents. U.S. births in 2017 dropped to the lowest number since 1987. Study Spending Waves It's true that much of the drop in births occurred among teenagers, where births fell by more than 8%, but those women are not making up for the lack of kids later in life. Our headcount is dropping. It's a problem for the economy, and oddly, it's mostly about money. A research piece in the New York Times last year found that four out of the top five reasons people gave for not having, or not expecting to have, their ideal number of children were financial. The reasons ranged from "Child care is too expensive," to "waited because of financial instability." Our work at Dent Research centers on how people spend in predictable ways as they age. Much of that spending is centered on raising families, which puts us on a predictable path of wanting a home, cars, clothes, and then a bigger home, before changing our focus to ourselves when they leave the nest. Without kids, we don't have the same need to spend, and certainly don't have the need to buy big, financed items such as houses. We can discuss or argue the merits of encouraging couples to have kids, along with ideas like universal childcare or increased child tax credits. I'm not making a case for or against any of it. I'm pointing out that with fewer kids, our national economic engine will lose some steam, and it will affect all of us, from Social Security to the available labor pool. We either have to find a way to make family life more palatable, or dramatically adjust how we finance and run the economy. In the time being, I'll hope that I see more kids at the local bus stop while eagerly await the last college bill, which is still more than a year away. 
Rodney Johnson Trending Stories... I noticed this cycle right away in my research in the early 1980s: Substantial stock market bottoms have come every 20 years, and major ones every 40. That 40-year cycle would correspond to the generation waves of spending that have actually peaked 39 years apart, in 1929, 1968 and 2007. Twenty years would be half... The summer of 2008 was crazy. The credit markets were frozen and the federal government put Fannie Mae and Freddie Mac into conservatorship. And there was a presidential election coming fast. That August, the Democrats made history by nominating the first black person as a major party candidate. It happened on a Thursday night, and... RV sales are crashing at a year-over-year rate of 20% below sales for the same period last year. 2017 was the peak thus far and 2018 sales were 4% lower. Hence, this year's crash is making this look like a clear top. RVs are one of our mid-life-to-retirement sectors for Boomers. Sales used to peak... This week wasn't any easier than the last, with more chaos throughout the markets and more concerns that a recession is surely to come. So, we're at a tipping point. In the Dark Window scenario that I've been talking about for a year now, a move upward here would be way up – maybe even... In the beginning of time, BC (Before Children), I traded bonds at Prudential Securities. It wasn't like the "Wolf of Wall Street" or even Bonfire of the Vanities, but it had its moments. We didn't get a lot of training. As we came in the door we were expected to know things like convexity and... | 
No comments:
Post a Comment