💴 Americans getting richer

Good morning investors! The market is stagnant, but there’s nothing to worry about.

Today we cover:

• Americans have more buying power now.

• Stocks slow down

• Reminder – student loan forgiveness deadline is near

Reminder: We’re at the middle of the year, prepare to invest and make money as a Pro Member by upgrading to the Pro Issue. We’ll be covering ‘top stock picks for the remainder of the year this week’, so don’t miss out.

📊 Economy and News 

Americans are getting richer

Americans have seen their buying power rise for a year amid falling inflation and a strong job market, which might be welcome news for households struggling to afford everyday purchases.

The average worker in the private sector saw their real hourly earnings grow 0.8% from May 2023 to May 2024.

The trend of growth in annual real earnings has persisted since May 2023. It’s been especially strong for rank-and-file workers who work in non-managerial roles.

Meanwhile, the labor market was white-hot as the U.S. economy reopened from its pandemic-induced lull. Job openings hit a record high, unemployment was near a historical low, and workers quit at record levels amid the ease of finding higher-paying gigs elsewhere.

For example, job openings peaked at more than 12 million in March 2022, up from roughly 7 million before the pandemic. That month, the average worker saw their pay growth spike to about 6% annually. Before the pandemic, average raises hadn’t exceeded 4%, according to the BLS, which tracks such data back to 2007.

The average worker got a bigger raise than they had in decades, but the raise wasn’t enough to eclipse inflation, which peaked at more than 9% in June 2022. That resulted in two years of falling real wages.

However, inflation has since eased and the labor market remains strong, though it has broadly cooled since 2022, roughly to its pre-pandemic baseline.

Average “nominal” pay (i.e., before inflation) for all workers is up almost 23% to $34.91 an hour since January 2020. Pay has grown even faster for rank-and-file employees, rising over 25% to $30 an hour.

Global hits:

• Mortgage rates fall to their lowest level in almost three months, with the standard 30-year fixed-rate mortgage averaged 6.87% in the week ending June 20.

• Top BofA auto analyst says Detroit automakers need to exit China as soon as possible.

• New York governor signs bill regulating social media algorithms, in a US first

Also check: OpenAI competitor Anthropic announces its most powerful AI yet claiming it to be better than ChatGPT 4.

📈 Stocks

S&P 500 5,473.17 (-0.25%)
DJIA 39,134.76 (+0.77%)
NASDAQ 17,721.59 (-0.79%)
BRENT CRUDE 85.71 (+0.75%)
* Prices as of Jun 21st, 12:20 AM UTC

Stocks take a breather

The S&P 500 retreated yesterday after briefly surpassing the 5,500 mark for the first time ever, as market leader Nvidia relinquished earlier gains.

Interestingly, despite a decline of over -3% yesterday, Nvidia’s market value has exceeded the combined individual stock market values of Germany, France, and the UK.

"Seasonally adjusted, it’s a low volume period for markets, and there doesn’t seem to be much driving daily movements," said Nathan Kotler, head of trading at GenTrust. "There are signs of the market becoming somewhat overextended, but the momentum has been extraordinary this week."

The excitement surrounding AI has continued to drive the market higher in recent weeks, even as some on Wall Street express concerns about a lack of market breadth beyond the major technology companies.

Additionally, recent economic data has bolstered the argument that the economy is softening. This data included higher-than-expected weekly jobless claims, as well as disappointing housing starts and permits. The Philadelphia Fed Manufacturing Index also came in below estimates.

Exciting: Twice-yearly shots of Gilead HIV drug effective in large prevention study.

💵 Personal Finance

Reminder: Student loan forgiveness deadline is June 30

Student loan borrowers have until the end of June to meet a deadline that could expedite their path to debt forgiveness.

Some may even see their debt cleared immediately.

Those with multiple student loans who apply for loan consolidation by June 30—combining several federal student loans into one new loan—can benefit from this temporary policy.

Here’s what borrowers need to know.

Debt consolidation can offer relief

Many student loan borrowers have multiple education loans, either due to borrowing repeatedly throughout their college years or returning to school later.

For those enrolled in income-driven repayment plans, this often results in multiple timelines for loan forgiveness. Depending on the specific plan, borrowers can have any remaining debt forgiven after 10, 20, or 25 years.

Under a temporary policy by the Biden administration, borrowers who consolidate their loans will receive credit toward all their loans based on the one they have been paying off the longest. They will also gain credit for certain periods that previously didn’t count, such as months spent in deferments or forbearances.

Experts suggest that consolidating while this policy is in effect could be highly beneficial for many borrowers.

For instance, consider a borrower who graduated in 2004, took out additional loans for a graduate degree in 2018, and is now repaying under an income-driven plan with a 20-year timeline to forgiveness. Experts say that consolidating before July 1 could enable them to qualify for forgiveness on all their loans much sooner, even though they would typically need to wait at least another 14 years for full relief.

Usually, student loan consolidation resets a borrower’s forgiveness timeline to zero, making it a poor choice for those working towards loan cancellation.

Reminder: All federal student loans—including Federal Family Education Loans, Parent Plus loans, and Perkins Loans—are eligible for consolidation.

Moreover, consolidating your loans should not increase your monthly payment, as payments under an income-driven repayment plan are typically based on your income rather than your total debt.

💰 Be a Better Investor

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

Advertise with Us