Weekly Market Update by Retirement Lifestyle Advocates

Yellen:  US Will Hit Debt Ceiling Limit One Day After Inauguration

         In what may be her last official statement prior to leaving office, Treasury Secretary Janet Yellen announced that the United States will hit the debt limit on January 21, one day after the inauguration.

         Yellen stated that as of January 21, the US Treasury Department will engage in “extraordinary measures” to avoid a default on the debt.  The outgoing Treasury Secretary added, “I respectfully urge Congress to act promptly to protect the full faith and credit of the United States.”  (Source:  https://www.zerohedge.com/markets/her-last-official-act-yellen-warns-us-will-hit-debt-ceiling-one-day-after-trump)

         Interesting comments from the person who, as head of the Federal Reserve from 2010 to 2017, saw the national debt increase by $6.8 trillion and, as Treasury Secretary, saw the debt increase by another $8.4 trillion.

More US states embracing “sound money”

         Legislators in the US State of Wyoming introduced a bill last week that would create the Wyoming Gold Reserve.

         Bob Ide of Caspar, Wyoming, introduced the legislation that would eliminate all tax liability from gold and silver transactions and would make both gold and silver legal tender in the State of Wyoming.  (Source:  https://www.moneymetals.com/news/2025/01/09/sound-money-advocates-in-wyoming-introduce-bill-to-establish-gold-reserve-003742)

         The bill would require the Wyoming state treasurer to hold not less than ten million dollars in specie and specie legal tender (gold and silver) between and across all state-managed accounts.

         Ide was quoted as saying, “Wyoming doesn’t own a single ounce of gold, putting our state’s finances and citizens at risk. International countries’ central banks all over the world, and even neighboring Utah and other states across the U.S., have started to seek alternatives to the U.S. Dollar. Gold and silver have been a reliable store of value for thousands of years.”

         The states of Tennessee and Utah recently passed similar legislation, and a parallel bill is also now pending in the state of New Hampshire.

Have Americans Collectively Reached Their Credit Card Limits?

         Over the past several months, I have speculated that the debt accumulation seen in the private sector over the past decade may be peaking.  I’ve cited data to back up this theory.

         Now, though, it seems that there is more data that confirms that this is the case.  While credit card spending has been declining for several months, it literally fell off a cliff during the month of November, according to Federal Reserve data.  (Source:  https://www.moneymetals.com/news/2025/01/10/recession-watch-are-americans-close-to-hitting-their-credit-card-limits-003744)

         Consumer debt fell by $7.5 billion in November, driven by a 12 percent decline in revolving credit, which is primarily credit card debt.  Despite the decline, Americans are still up to their collective neck in consumer debt, with $5.1 trillion of outstanding debt.

         When you include mortgages, US households have total debt of nearly $18 trillion.

         The big drop in consumer debt in November is important since large declines in consumer debt often signal the early stages of a recession.

Retirement Trouble?  47 Million Older American Households Facing Financial Risks

         New research by the National Council on Aging (Source:  https://www.ncoa.org/article/47-million-seniors-struggle-financially-or-are-at-risk/) found that 47 million households with older adults are already struggling financially or are at extreme risk of falling into financial insecurity.

         Researchers looked at data from 2016 and 2018 and found that 80% of households with older adults either cannot afford their basic and long-term care needs today or are at risk of not being able to do so in the future.  The researchers also found that older households in the top 20% experienced much larger gains in net worth in two years than their less wealthy counterparts.

         Dr. Susan Silberman, Senior Director of Research and Evaluation for the National Council on Aging, noted that “the gap between the haves and the have-nots appears to be widening.”

         Researchers defined a household as financially secure if their total net worth could cover the costs of housing, food, other necessities and long-term care needed.

         Households determined to be at risk were defined as those with some savings and assets to potentially meet current needs but not enough to cover a financial shock like a long-term care expense, becoming widowed, or losing the ability to work.

US Budget Deficit for the First Quarter of the Current Fiscal Year is Up 40%

         Mike Maharrey notes that the US budget deficit for the first quarter of the fiscal year is about 40% higher than the same period one year ago.  (Source:  https://www.moneymetals.com/news/2025/01/16/federal-budget-deficit-up-nearly-40-percent-through-first-quarter-of-fiscal-2025-003759)

         To be more precise, the deficit is actually up 39.4%.  The Biden administration ran a deficit of $86.7 billion in December, pushing the October through December deficit to $711 billion.  (Note: the 2025 fiscal year of the US Government began on October 1, 2024)

         Tax receipts were down 2.2% from one year ago, which is an issue but not the big problem here.  The problem lies on the spending side of the ledger.  First quarter spending was $1.79 trillion, a 10.9 percent increase from one year ago.

         Consider that statistic in the context of the federal government increasing spending in 2024 from 2023 by 10% as well.

         Federal spending is truly reckless and out of control as interest rates to finance the debt continue to rise.

         This week’s RLA radio program features a ‘best of’ interview that I did with Michal Oliver, founder of Momentum Structural Analysis.  Michael has developed an uncannily accurate method of evaluating and forecasting where markets will go in the future.  The interview is available now by clicking on the "Podcast" tab at the top of this page.

"It’s choice not chance that determines your destiny.”

                                                               -Jean Nidetch