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This week, Social Security celebrated its 84th birthday. The question is will it be around for another 84 years?
According to the National Academy of Social Insurance, an estimated 61 million Americans collect Social Security benefits each month. That’s about one in five people in the U.S.
With some many people in need of its benefits, it’s easy to see why experts and individuals are worried that the well will run dry – and soon.
For the first time since 1982, the Social Security Administration’s total cost is projected to exceed its total income next year.
The dire situation Social Security finds itself in will undoubtedly become a hot topic in the 2020 elections as candidates release budget proposals for spending on programs such as Social Security and Medicare.
Consumer Debt Squashing Potential Economy Growth
U.S. consumer debt has set a new record at $13.86 trillion. This number surpasses the previous record of $12.68 trillion from just before the Great Recession in 2008.
Experts point to student loans as a main culprit of rising consumer debt. Although loan balances went down from $1.49 trillion to $1.4 trillion in the second quarter, the amount of loans that are being defaulted on is increasing.
Almost 10% of student loan payments were at least 90 days late in the second quarter. This is a .5% increase from the first quarter (9.4%).
Unfortunately for Americans, it doesn’t stop there. Credit card users are falling behind in their payments, too. Payments on credit card balances were up .2% in the second quarter (5.2%) from 5%.
This week, investors watched as the stock market had its largest drop of the year. On Wednesday, the DOW was down more than 800 points (over 3%).
Wall Street’s worst week of the year (so far) was been driven by two things. First, the yield curve for U.S. Treasuries inverted. Specifically, the yield on the 10-year note dropped below that of the 2-year note, which is often a leading indicator of recession.
Second, there are signs of slowing growth around the world, especially in Germany and China, two major exporting countries.
Brad McMillan, chief investment officer at Commonwealth Financial Network said that despite the typical bond market recession indicators, it really is anybody’s guess whether or not a recession is coming.
“Combined, these factors may suggest the real possibility of a global recession,” McMillan said. “Or, of course, they may not. At this point, the outcome is uncertain, and the market is struggling to figure out what is going to happen.”
AdvisorNews Managing Editor Cassie Miller may be reached at cassie.miller@Adnewsfeedback.com. Cassie has an extensive background in magazine writing, editing and design. Follow her on Twitter @ANCassieM.