Category: Economic

15 Cities Where Retirees Are Most Reliant on Social Security

Mary Pat Campbell

Link: https://www.thinkadvisor.com/2023/04/26/15-cities-where-retirees-are-most-reliant-on-social-security/

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A new report from SmartAsset finds that Social Security benefits comprise 41.7% of a retiree’s total income of $50,780, on average. That percentage is even higher for retirees in some cities, where benefits can make up half of overall retirement income.

To find out where retirees rely most on Social Security, SmartAsset examined data for Social Security income as a percentage of overall retirement income in the 100 U.S. cities with the largest population of residents ages 65 and older.

Author(s): Michael S. Fischer

Publication Date: 26 Apr 2023

Publication Site: Think Advisor

Debt ceiling fears push the cost of insuring against a US government default to highest level since 2008 crash

Mary Pat Campbell

Link: https://finance.yahoo.com/news/debt-ceiling-fears-push-cost-184617316.html

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The cost of insurance against the US failing to repay its debts rose to its highest level since the financial crisis last week, as traders worried that political deadlock in Washington might lead to a default.

One-year government credit default swaps traded at 106 basis points Saturday – the most expensive they’ve been since 2008, according to a Financial Times report that cited Bloomberg data.

Credit default swaps – or CDSs – are a form of insurance against a borrower not making scheduled payments on their debt.

The price of one-year government CDSs has spiked 15 basis points in 2023 with traders spooked by the looming threat of a debt-ceiling crisis, the FT reported.

The debt ceiling is a limit on how much the government can borrow, set by Congress. The US hit its $31.4 trillion debt limit in January – and that means it could run out of money to pay its bills as soon as July if lawmakers don’t vote to raise the ceiling, according to the Congressional Budget Office.

Author(s): George Glover

Publication Date: 24 Apr 2023

Publication Site: Yahoo Finance

Wall Street Boosts States’ Credit Scores as Recession Worries Cloud Outlook

Mary Pat Campbell

Link: https://www.bloomberg.com/news/articles/2023-04-19/wall-street-boosts-states-credit-scores-as-recession-woes-cloud-outlook

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Illinois, Massachusetts and New Jersey this year have garnered higher credit scores from rating companies, including brighter outlooks for the states as well. The upgrades also helped shrink bond yield spreads in the primary and secondary municipal markets, signaling investor perception of state debt is improving.

The better state ratings are due in part to the positive effect of federal pandemic aid, which some states used for one-time expenses while others set cash aside for the future. State treasuries also saw an influx of tax revenue from residents — bolstered by US stimulus money sent to individuals — who spent on services at home at the height of the pandemic, and on travel after Covid lockdowns were eased. 

Still, a slowdown in the US economy this year is causing concern that states can no longer expect a cash haul. The likelihood that the economy in the next 12 months will slide into a recession is greater now than a month earlier, according to a March 20-27 Bloomberg survey of 48 economists.

The poll, conducted after several bank closures roiled financial markets, put the odds of a contraction at 65%, up from 60% in February, amid interest-rate hikes by the Federal Reserve and growing risks of tighter credit conditions. 

Author(s): Skylar Woodhouse

Publication Date: 19 Apr 2023

Publication Site: Bloomberg

Credit Default Swaps Imply a Two Percent Chance the US Defaults

Mary Pat Campbell

Link: https://mishtalk.com/economics/credit-default-swaps-imply-a-two-percent-chance-the-us-defaults

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The implied odds are two percent but contract trading is very thin. And some of the protection is mandatory.  If regulators raise risk flags, some banks feel compelled to buy insurance. 

So most likely the true odds of default are much lower.

There is also a three day grace period. We could have a default, but if it is rectified within three days, those betting on a default will be technically correct yet receive no payout.

I believe the odds of a payout on these contracts is essentially zero. But yeah, if there is a default for a couple of days, there will be “chaos” as several people on Twitter have commented. 

Author(s): Mike Shedlock

Publication Date: 21 Apr 2023

Publication Site: Mish Talk

Pension reform in France: Which countries have the lowest and highest retirement ages in Europe?

Mary Pat Campbell

Link: https://www.euronews.com/next/2023/04/06/pension-reform-in-france-which-countries-have-the-lowest-and-highest-retirement-ages-in-eu

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The gap between women and men in expected years of retirement varies from 2.0 years in Ireland to 7.5 years in Cyprus. 

By 2020, European women typically can expect to live 4.3 years more than men after they exit the labour market. 

While the EU average is 4.6 years, in France, the gender gap stands in favour of women by a total of 3.6 years.

Interestingly, life expectancy in retirement for both highly varies across Europe. For men, it ranges from 14 years in Latvia to 24 years in Luxembourg.

For women, it varies from 18.9 years in Latvia to 28.4 years in Greece. Women are expected to have 26 years or more to spend while retired in Belgium, France, Greece, Italy, Luxembourg and Spain.

Author(s): Servet Yanatma

Publication Date: 6 Apr 2023

Publication Site: euronews