Broker Check

May 14, 2018

| May 29, 2018
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How do employers lure staff in a tightening labor market? The curly tail grubs and spinnies of the business world are higher wages and better benefits.  

During the past decade, the employment picture in the United States has shifted dramatically. In mid-2009, 15.4 million unemployed Americans were chasing 2.2 million available jobs. At the end of 2017, just 6.6 million Americans were unemployed, and employers were casting eagerly to fill 6.6 million open jobs, reports Barron’s.

Bloomberg offered some colorful examples:

“Want ads for truck drivers to haul crude oil in Texas are touting salaries as high as $150,000 a year. Some nurses are getting $25,000 signing bonuses. The U.S. unemployment rate just fell to 3.9 percent, one tick away from its lowest since the 1960s. And, on May 8, the Bureau of Labor Statistics reported there are 6.5 million unfilled jobs in the United States, the most on record. Some employers say they’re feeling the squeeze.”

Clearly, wages are moving higher for some types of jobs, but they’re not increasing everywhere. Last week, the Bureau of Labor Statistics reported real average hourly earnings for all employees were flat from March to April. ‘Real wages’ mean wages after inflation is subtracted.

The National Federation of Independent Business’ Small Business Optimism Index hit a record high in April, as small companies reported record profits. It was the 17th consecutive month of record optimism.

A benign inflation report and positive news out of North Korea provided a boost for global stock markets. For the week, the S&P 500 rose 2.4 percent. Global stocks rose, as the MSCI ACWI rose 2.1 percent. The Bloomberg BarCap Aggregate Bond Index was unchanged for the third straight week.

Economic News

April’s inflation numbers came in slightly below expectations, which provided a boost to markets. April’s price index rose 0.2 percent, slightly less than the 0.3 percent expected. Over the last year, inflation rose 2.5 percent. A rapid increase in gasoline prices in April contributed to the strong number. The continued increase in oil prices will likely boost inflation again in May.

Core inflation, which excludes energy and food prices, rose 0.1 percent last month and has increased 2.1 percent over the last year. Energy and food prices often rise and fall more than other sectors.


The stock market reacted positively to the lower-than-expected numbers. Many investors remain concerned the long economic recovery and low unemployment rate will eventually lead to higher inflation.


While welcoming the news from the last report, we continue to believe inflation will become a greater threat. Our expectations are for wage growth to strengthen and for those costs to be passed on to consumers in the form of higher prices.


Key points for the week


  • Inflation data came in slightly below expectations.
  • Excluding the energy sector, price increases were moderate.
  • Inflation remains a concern as the economy continues to grow.


IRS Announces 2019 HSA Contribution Limits.

The IRS issued the calendar year 2019 inflation-adjusted figures for the annual contribution limits for health savings accounts (HSAs) and the minimum deductible amounts and maximum out-of-pocket expense amounts for high-deductible health plans.

For 2019, the annual limit on deductible contributions is $3,500 for individuals with self-only coverage (a $50 increase from 2018) and $7,000 for family coverage (a $100 increase from 2018).

The IRS recently announced that the 2018 limit for family coverage is $6,900, after recalculating the amount under the new inflation adjustment of P.L. 115-97, the law known as the Tax Cuts and Jobs Act of 2017, as $6,850 and then granting relief for the retroactive change (We wrote about this several weeks ago here).

To be eligible to contribute to an HSA, an individual must participate in a High Deductible Health Plan (HDHP), which is a health plan with an annual deductible that is not less than a certain limit each year and for which the annual out-of-pocket expenses, including deductibles, co-payments, and other amounts, but excluding premiums, do not exceed a certain limit each year. The limits on annual deductibles are also subject to annual inflation adjustments. For 2018, the lower limit on the annual deductible for an HDHP is $1,350 for self-only coverage and $2,700 for family coverage, both unchanged from 2018. The upper limit for out-of-pocket expenses is $6,750 for self-only coverage and $13,500 for family coverage, both increased from 2018.

A reminder to individual and families covered under a High Deductible Health Plan in Maryland. Current Maryland insurance law requires all policies issued or renewed in the state after January 1, 2018 to provide coverage for male contraception and sterilization procedures without being subject to any cost-sharing requirements (including the deductible). This requirement caused all Maryland HSA to no longer be qualified under IRS rules.

However, the IRS on March 5th provided transition relief for any individual who was covered, is now covered or will be covered by a plan which otherwise would qualify as a HDHP except for the sole reason that it also provides “free” state-mandated male contraception and sterilization coverage. Individuals covered by such plans remain eligible to make and receive tax free contributions to an HSA, so long as all other requirements are met, for all periods prior to January 1, 2020. Advocacy groups are working with the Maryland Legislature to remedy this issue prior to December 31, 2019.

If you have any questions regarding Health Savings Accounts, please give us a call.


What are we reading?

Below are some articles we paid particularly close attention to this week. We encourage our readers to follow the links.


IRS Warns Taxpayers about New Twist on Phone Scam

In a recent News Release, the IRS warned taxpayers about a new twist on an old phone scam. Criminals are now claiming to be calling from local IRS Taxpayer Assistance Centers (TACs). They accomplish this by programming their computers to display TAC phone numbers, which appear on the taxpayer's Caller ID. If the taxpayer questions the legitimacy of the call, the scam artist directs the taxpayer to to verify the local TAC office phone number. Once this has been done, the scam artist demands money, generally on a debit card. Fraudsters also have been spoofing local sheriff's offices, state Department of Motor Vehicles, federal agencies, and others to convince taxpayers the call is legitimate. The IRS reminds taxpayers that it typically initiates contact through regular mail delivered by the U.S. Postal Service.


Connecticut Passes Bill to Bypass State and Local Tax Cap from the Tax Cuts and Jobs Act.

Connecticut has passed a bill that will allow municipalities to create charitable entities that will receive ‘contributions’ to fulfill a taxpayer’s property tax liability. Experts anticipate IRS challenges to this state-run charity workaround and the United States Treasury has already called into question the legitimacy of this strategy. New York and New Jersey are also considering similar legislation, since the cap on state income tax deductions impacts states with high taxes.


What Do You Wish You Had Known Before You Became a Parent?

Mother’s Day is behind us and Father’s Day is ahead.It seems like a good time to consider the challenges and responsibilities of parenting.

National Public Radio’s Science Desk introduced a new series called, ‘How to Raise A Human.’ They kicked off the show by asking bloggers, “What's the one thing you wish someone had told you before you became a parent?” Here are a few of the answers:

“I wish someone told me that there are going to be moments where you're playing chess with speed metal music in your ears. You're trying to make intricate choices but there's so much chaos.”

--Alan Lawrence, That Dad Blog

“I wish someone had told me to block out the outside voices that come when you become a parent – and pay more attention to the children and what their needs are.”

--Saira Siddiqui, Confessions of a Muslim Mom

“I wish someone had told me that even though your life changes when you become a parent, you still get to create the path you want.”

--Drea Duclos, OhDearDrea

“Parents always told me to brace myself for the teen years, because that's when they'll hate you, be disrespectful to you, be sassy, talk back to you, be rude, be generally awful people. But I wish that someone had told me that's completely wrong.”

--Karen Walrond, Chookooloonks

Weekly Focus – Think About It

"Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around."

~ Leo Buscaglia, Author and Lecturer

"Do not work to make a living, rather work to make a life.  For the measure of succeeding is your service in the strife."

~ Wilfred Peterson, Author

"A winner is someone who recognizes his God-given talents, works his tail off to develop them into skills, and uses these skills to accomplish his goals."

~ Larry Bird, Basketball Player

Links & Disclaimers

RJFS and SPC do not offer or provide legal or tax advice. Tax services and analysis are provided by the related firm, S&M through a separate engagement letter with clients. Portions of this newsletter were prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with RJFS, SPC or S&M.  The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  This information is not intended as a solicitation of an offer to buy, hold or sell any security referred to herein.  There is no assurance any of the trends mentioned will continue in the future.  Any opinions are those of the author and not necessarily those of RJFS.  Any expression of opinion is as of this date and is subject to change without notice.

Opinions expressed are not intended as investment advice or to predict future performance.  Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.  Past performance does not guarantee future results.  Investing involves risk, including loss of principal.  Consult your financial professional before making any investment decision.  Stock investing involves risk including loss of principal.  The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock companies maintained and reviewed by the editors of the Wall Street Journal. The MSCI ACWI (All Country World Index) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. As of June 2007 the MSCI ACWI consisted of 48 country indices comprising 23 developed and 25 emerging market country indices. The developed market country indices included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the United States. The emerging market country indices included are: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. The Barclays Capital Aggregate Bond Index, which used to be called the "Lehman Aggregate Bond Index," is a broad base index, maintained by Barclays Capital, which took over the index business of the now defunct Lehman Brothers, and is often used to represent investment grade bonds being traded in United States. Please note direct investment in any index is not possible.

Links are being provided for information purposes only.  RJFS, SPC and S&M are not affiliated with and do not endorse, authorize or sponsor any of the listed websites or their respective sponsors, and they are not responsible for the content of any website, or the collection or use of information regarding any website's users and/or members.

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