Economic News a Reason for Holiday Cheer!

The media thrives on negative news, especially the financial media. Fortunately, not all of the economic news is doom and gloom. To boost your holiday cheer, here are some fun facts signaling that the economic recovery may be underway.

Pending Home Sales Jump to Nearly Six-Year High

The National Association of Realtors reported that the pending home sales index rose 5.2% in October. Importantly, that number is from when the results of the presidential election were unknown. Pending home sales are defined as a signed sales contract, so actual closing is usually one to two months later.

• This is the highest level of activity since March 2007.
• The Midwest led the country with a 15.6% increase.

In further good news, the excess supply of homes that built up before the housing crises has finally thinned out.

• Previously occupied home sales inventory is at a 10-year low.
• New home sales inventory is near the lowest level since 1963.

U.S. Business Spending Plans Improve

"Planned U.S. business spending increased in October by the most in five months." [Tweet this]

A major gauge of planned U.S. business spending increased in October by the most in five months. While the growth was modest, it may signal a slow recovery.

• Orders for non-defense capital goods excluding aircraft rose 1.7%.

Consumer Confidence Hits a Four-Year High

Consumers are growing increasingly optimistic about the job market and economic recovery.

• The Conference Board Index of Consumer Attitudes rose to 73.7, its highest level since February 2008.

Home Prices Boast Biggest Rise in Over Two Years

A combination of record-low mortgage interest rates, an improving job market, a five-year low in home foreclosures, and a tighter supply of both new and previously owned homes led to home prices posting the biggest percentage gain in more than two years.

• The closely watched S&P/Case-Shiller Index rose 3.6% in the third quarter.
• We recently saw the second straight quarter of year-over-year improvement.
• Single-family home prices rose for the eighth straight month in September, based on an index of 20 major metropolitan areas.

So shake off the doom and gloom and celebrate the holiday cheer. Optimism is an important psychological element in any economic recovery. Now that you know the facts you can do your share and spread the good word. Happy Holidays!

About Bruce J. Berno, CFP^®
Bruce J. Berno, CFP^® is the founder of Berno Financial Management, Inc. a fee-only comprehensive personal financial planning and investment advisory firm headquartered in Cincinnati, Ohio. Since 1993, Berno Financial Management has been helping individuals and families achieve financial peace of mind. For more information about Berno Financial Management, visit http://www.bernofinmgt.com.

What It Takes to Join the 1%

How much do you need to make to be in the top 10% earners in the U.S.? What about the top 1%?

The top 1% is a politically vilified group, but they may not be who you think they are. So, who are the 1%? What is the price of membership in this club? Could you be in the top 10%? Finally, do the rich pay their share of taxes?

Who Is In the Top 10%?

"The top 10% had at least $116,623 of adjusted gross income" [Tweet this]

Let's start with the top 10%, because more people belong to that group than you may expect. Based on 2010 income tax returns using adjusted gross income (basically the number at the bottom of page 1 of your Form 1040, before exemptions and deductions):

• The top 10% had at least $116,623 of adjusted gross income (AGI).
• The top 10% includes 45% of the total AGI.
• The top 10% paid 70.6% of the total income tax burden.

The bottom 90% of taxpayers paid less than 30% of the total national income tax.
The bottom 50% of taxpayers paid 2.36% of the total federal income tax revenues.

• The top 5% had at least $161,579 of AGI.
• The top 5% includes 34% of the total AGI.
• The top 5% paid 59.1% of the total income tax burden.

Now, a drum roll for the top 1%:

• The top 1% had at least $369,691 of AGI.
• The top 1% includes 19% of the total AGI.
• The top 1% paid 37.4% of the total income tax burden.

Now you know what it takes to "join the club."

Income equality and tax fairness are challenging dilemmas. Be well informed and draw your own conclusions as the debate continues over the fiscal cliff and other economic policy issues.

About Bruce J. Berno, CFP^®
Bruce J. Berno, CFP^® is the founder of Berno Financial Management, Inc. a fee-only comprehensive personal financial planning and investment advisory firm headquartered in Cincinnati, Ohio. Since 1993, Berno Financial Management has been helping individuals and families achieve financial peace of mind. For more information about Berno Financial Management, visit http://www.bernofinmgt.com.