america’s financial future. 14 challenging trends: america’s financial future

America’s Financial Future


14 Challenging Trends:



“Great Recession”



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



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

http://www.zillow.com/

Health Care Costs



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

http://online.wsj.com/article/SB10001424052748703746604574461610985243066.html

http://online.wsj.com/article/SB10001424052748703746604574461610985243066.html

Public Education



1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education

Energy Dependence



1. ‘Great Recession’2. Real estate values3. Health care costs4. Public education5. Energy Dependence

Great Retirement Options



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


6. Pensions, Soc sec, 401(k)

Entitlement Programs




6. Pensions, Soc sec, 401(k)7. Entitlements

Federal Budget Deficits




6. Pensions, Soc sec, 401(k)7. Entitlements8. Budget deficits

Aging Parents




6. Pensions, Soc sec, 401(k)7. Entitlements8. Budget deficits9. Aging parents

Workers will not retire





10. Workers will not retire 1980

Retire at age 65?

14%

2010 75%

Debt levels still high





10. Workers will not retire11. Debt levels

Taxes will increase





10. Workers will not retire11. Debt levels12. Taxes

Adult children ‘obligations’






13. Adult children ‘obligations’

‘Away from home missions’




13. Adult children ‘obligations’14. ‘Away from home missions’



22 Compelling Trends:


22 Compelling Trends:

Purging inefficient prosperity


22 Compelling Trends:1. Purging inefficient prosperity

Real estate more affordable


22 Compelling Trends:1. Purging inefficient prosperity 2. Real estate more affordable

Corporate profits and cash are strong



3. Corporate profits and cash strong

Salt Lake Tribune – Nov 16, 2010

. . . and they are investing!

Diversification and allocation worked


ALLOCATION


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



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




Regenerative Medicine – grow new cells and organsMolecular disease diagnosisGenome/DNA risk tolerance profilingAnti-aging medications

• Medicine

Extraordinary advances in:




• Medicine


• Energy Efficiencies




• Medicine


• Energy Efficiencies• Transportation




• Medicine


• Energy Efficiencies• Transportation• Education

FACTS/INFORMATIONKNOWLEDGE/UNDERSTANDING

WISDOM/APPLICATIONIMAGINATION/CREATIVITY

VISION/INSPIRATION




• Medicine


• Energy Efficiencies• Transportation• Education

• Information Systems



6. Extraordinary advancesMedicine, energy, transportation, education, information systems

4. Diversification and allocation worked5. Resistance to inflation, interest rates

More high income earnersHigher expectations





7. High income earners


You will live longer and healthier





7. High income earners8. You will live longer and healthier


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






9. Larger inheritances


http://www.bmo.com/pdf/mf/prospectus/en/09-429_Retirement_Institute_Report_E_final.pdf



The ‘2030 Pension’Reverse Mortgages






9. Larger inheritances10. Home equity – the next pension


Government ‘bailouts’have ‘worked’

http://www.propublica.org/special/government-bailouts







11. ‘Government bailouts’ have worked


http://www.propublica.org/special/government-bailouts

Workforce assimilation• Agrarian

• Computer displacement• Two income families• Services• Manufacturing• Industrial

• International relocation• International outsourcing• Immigration







11. ‘Government bailouts’ have worked12. Amazing workforce assimilation


AmericanDemographics


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








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 . . .








14. Creativity, imagination and resourcefulness



Higher educationskilled workforce









4. Diversification and allocation worked

15. Higher education – skilled workforce

5. Resistance to inflation, interest rates


Likely new tax• Federal Sales

• Value-added• Consumption

• Transaction








16. Strong population demographics


17. ‘Transaction tax’





American economyHAS to grow

America’s Financial FutureStephen J. Rose• Research Professor at Georgetown

University• Senior Advisor to Robert Reich

Secretary of Labor









17. ‘Transaction tax’18. The American economy has to grow





American economystill the world leader












19. American economy still world leader




http://www.sltrib.com/csp/cms/sites/sltrib/pages/printerfriendly.csp?id=50640829

America: the Crossroads Nation




New financialmarket regulations












19. American economy still world leader 20. New financial market regulations




http://www.brookings.edu/opinions/2010/0716_financial_reform_elliott.aspx



‘Armaggedon’?











21. Armaggedon?

18. The American economy has to grow















21. Armaggedon?

18. The American economy has to grow






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


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


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


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


FACTS/INFORMATION

KNOWLEDGE/UNDERSTANDING

WISDOM/APPLICATION

IMAGINATION/CREATIVITY

VISION/INSPIRATION

america’s financial future. 14 challenging trends: america’s financial future

Documents

great recession slide

challenging trends

real estate values

health care costs

public education slide

energy dependence slide

great recessionnational

budget deficits slide