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Employee Healthcare
Deductibles Up 400%
Between 2006 and 2017 ...
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The Kaiser Family Foundation reported that deductibles and co-insurance payments, up 89%, soared while wages rose just 31%.
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Insurance premiums through the federal marketplace, often called Obamacare, will rise an average of 25% next year. So that you are aware Obamacare, through the exchanges, ONLY provides insurance to less than 10% of Americans.
About 1/2 of Americans get insurance through their employers, where premiums didn't rise as fast, but their policies have become less generous through higher deductibles and higher required co-insurance payments.
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Executive Order Too Late
To
Affect Obamacare
November 1 Open Enrollment ...
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The President signed an executive order that will direct various agencies to "provide relief" to unsubsidized Obamacare customers, but the process will not be complete in time for open enrollment beginning Nov. 1.
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The executive order will be aimed primarily at Obamacare customers who are facing higher costs in the Obamacare market.
It has 5 components. Broadly, it will direct the administration to increase healthcare choice and quality. The Department of Labor will have to expand the use of "association health plans," which would allow various small businesses, or perhaps individuals, to band together for the purpose of providing health insurance.
The order also directs the Secretaries of Labor, Treasury and Health and Human Services to issue regulations on short-term health insurance, which the Obama administration limited, and allow for changes to health reimbursement arrangements.
Middle-Class Americans who do not receive health insurance through a job or through a government program are facing higher premiums under Obamacare for 2018, but the different agencies will need several months to be able to review the regulations, propose changes and allow for a public comment period before changes are made. This means changes probably won't come in time for Obamacare's open enrollment period, which begins Nov. 1 and ends Dec. 15, given that public comment periods typically last 180 days.
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Retail Sales Up 1.6% in
September ...
Due To
Hurricane Harvey
...
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Vehicle sales ticked up 3.6% and gasoline rose 5.8%
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It's still about Hurricane Harvey. Consumers need to replace hundreds of the thousands of damaged cars. I expect this replacement wave to run at least through the end of the year.
Sales at building materials merchants, think Home Depot and Lowe's, jumped 2.1% last month. Like auto makers, material suppliers should enjoy boost over the next few months.
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Federal Reserve Bankers Plan
to Raise Rates in December ...
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According to the minutes from the September meeting, the bankers generally agreed to raise rates by the end of the year.
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The Fed members discussed low inflation and that they will closely watch price indicators over the next couple of months, but that's going to be quite a job.
Hurricane Harvey sent energy prices higher, and I expect increased consumption this quarter as those affected by the storms replace damaged goods and flooded cars and renovate their homes. But those effects should subside by the 1Q 2018.
If the Fed raises rates based on current data, it risks making an obvious mistake. Given how many times the Fed Governors have discussed raising rates lately, it seems like a foregone conclusion no matter what happens with the data.
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Consumer Price Index (CPI)
Rose 0.5% in September...
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A 6.1% rise in energy helped pushed consumer prices to their highest monthly gain in eight months.
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The rise in energy and gasoline (13.1%) reflects the refinery disruptions caused by Hurricane Harvey. Without that spike, prices remain sluggish. Core CPI, which removes food and energy, rose just 0.1% last month. Medical care, clothing, and car prices fell.
Like the jobs report last week, the hurricanes have thrown another report out of whack. The Fed seems intent on raising rates, so I don't expect this report to change their mind.
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Media Leaks Suggest the
ECB Could Cut Bond
Purchases
in
Half, End
Program in September...
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The ECB currently buys 60 Billion Euros per month of government bonds.
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As the world's central banks printed money together, global GDP grew at a tepid pace.
When the Fed starts shrinking its balance sheet and the ECB stops buying bonds, central banks will take money out of the global system. The ECB was bound to end their program at some point. The problem is, no one knows exactly when that will happen. What could possibly go wrong?
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Catalan Governor Declares Independence,
Then Suspends It ...
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The governor said he wanted to wait several weeks, so that he could negotiate with the federal government.
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Spanish Prime Minister Rajoy is upset. The irony of democracies and republics is that everyone is free, unless of course you no longer want to be ruled by the national government. Then you're an enemy of the state.
The Catalonian vote broke Spanish law, as does its declaration of independence. Rajoy has asked the Catalonian government to clarify its stance ... Is the region a loyal part of Spain, or do they wish to secede? If the answer is the latter, then Rajoy will invoke article 155, dissolve the Catalan government, and take over the regional government.
If any of this happens, it could disrupt the Spanish economy and send the Euro tumbling. It could also set a precedence for regions in other countries that hope to throw off the yoke of their national government.
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This Week's Events Reviewed
In Next Digest
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The 3rd week of October includes reports on industrial production, housing starts, and existing home sales.
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The Demographic & Economic Digest provides an excellent opportunity for timely dialogue. I value your opinion and feedback and would love to hear from you. What do you think?
Sincerely,
Bob
Robert A. Hardies, CFP, MS, ATP
Financial & Portfolio Advisors, Ltd.
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