Ignore the naysayers and look at the big picture -- Americans are still getting ahead: Rebecca Walser

This is the fastest wage growth for the lowest 25 percent of earners in nearly two decades

It is easy to get lost in the pressing news of the day – the impeachment trial, a possible worldwide pandemic with the coronavirus, and recent increased Middle East tension – are all enough to make anyone feel overwhelmed with anxiety about 2020. But, if we take a step back and a deep breath, we can start to see a much clearer picture, one that is actually filled with great recent achievements and expectations.

Tax cuts, real wage growth, increased consumer confidence -- each of these alone have had a tremendous positive impact on the past year. And, when you look at the combined tax cuts along with real wage growth, you have a 1-2 punch that has packed a powerful upswing for America’s middle class.

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The Census Bureau reports a real median household income in America at nearly $66,000 in 2019, the highest median income ever, growing nearly 8 percent since President Trump’s election.

The median incomes of $63,179 in 2018 and $62,626 in 2017 better highlight the 2019 growth, with total increases of more than $4,000 since President Obama.

Comparatively, under President Obama median income grew $1,000 from the start of the recovery after the Great Recession in June 2009 through January 2017.

President George W. Bush’s figure is even lower at just $401 throughout his eight-year tenure largely due to the recession’s downturn.

And real wage growth is actually growing fastest at the lower income levels.  When the labor market is tight – as it is now because we have more job openings than people looking for jobs – wages rise.

Right now, earnings are rising faster for retail, restaurants, grocery stores, entertainment parks, etc. than they are for consulting, medicine, law, tech and telecommunications.

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In fact, this is the fastest wage growth for the lowest 25 percent of earners in nearly two decades.

These lower-income categories have doubled earnings growth in the last five years and are also double the percentage of growth in hourly earnings for high-income earners.

Record low unemployment, corporate tax cuts bringing $1 trillion back to the U.S. while keeping money in the US, and business-friendly regulation pullbacks have all contributed to these happy stats.

And, in addition to this real wage growth, the 2017 tax reform that went into effect in 2018 has added an average of about $1,400 per household and as much as $2,900 for a married couple with children, according to the Center for Data Analysis at the Heritage Foundation.

It is not all roses though, as there are blue-state Americans whose taxes went up due to the $10,000 deduction limit on state and local taxes paid – ending federal subsidies of the higher-taxed states.

Consumer confidence is near its all-time 2018 high of 123 – on a scale to 138 – coming in at 122 for the fourth quarter of 2019.

Housing starts hit a thirteen-year high in December 2019, supported by homeowner friendly low mortgage rates.

All of this news comes alongside new all-time market high closes on the Dow, the S&P 500, and NASDAQ, buoyed by an executed Phase 1 China deal and USMCA being passed by both houses of Congress, expected to be signed by the President this week.

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Add in the possibility of a bilateral trade deal with the UK once they exit the EU on January 31 and the economy still has runway for further growth.

Still, even while most signals are pointing positive, we must always prepare for that rainy day which invariably will come.

From a purely cyclical perspective, we are overdue for a market correction by almost four years, since we have had a bear market downturn (a 20 percent decline or greater), on average, every seven years since 1929.

While I’m not one to pooh-pooh this great economic period of growth, I would like us to just take a moment to acknowledge that there is a great deal of uncertainty on the horizon in 2020 and recent current events in the spotlight can make us forget all of these great accomplishments.

But, instead of being filled with anxiety at the start of this new year and a whole new decade, we each could do ourselves a favor by setting some short-term, mid-term and long-term financial goals that include planning for the next economic correction/downturn.

Be sure to set those goals and then free yourself to stop and smell the roses -- because they really are still blooming right now in America -- and let yourself enjoy this economic ride for as long as it lasts.

Rebecca Walser is a tax attorney, a certified financial planner, and the author of "Wealth Unbroken," who specializes in the strategic planning of maximizing lifetime wealth while minimizing tax through her practice, Walser Wealth Management.

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