Stock Markets Dip, Education & First Friday!

February
25

Written by: Jon McGraw

Like Canadian geese migrating in anticipation of winter, stock markets moved south last week in anticipation of monetary tightening. No surprise there!

Minutes from the January Federal Reserve Open Market Committee meeting were released mid-week. After reviewing them, many analysts decided that quantitative easing may begin to taper off before the end of the year. Not everyone agreed with this interpretation; however, it caused major U.S. stock markets, as well as some Asian and European stock markets, to dip lower. Many markets recovered ground before Friday, but in the U.S., only the Dow Jones Industrial Index finished the week with a gain.

Interestingly, expectations that the Fed’s quantitative easing program may end relatively soon had little effect on Treasury bond markets. This seems counterintuitive because an end to quantitative easing (the Fed’s program of buying Treasuries to create liquidity and encourage economic improvement) could potentially lower demand for these securities and cause Treasury yields to move higher. Instead, yields moved lower last week. Experts suggested that bond investors’ apparent lack of concern may be rooted in the belief that the Federal Reserve will not ease interest rates even if it changes its policy on quantitative easing. In previous statements, the Fed has said it will not modify interest rates until unemployment rates and inflation reach specific targets.

Last week, The Conference Board announced that its Leading Economic Index® (LEI) for the U.S. showed America’s economy gaining some momentum. The LEI tracks 10 leading economic indicators to gauge short-term economic outlooks. The Conference Board’s LEI for China also signaled improvement. While this may prove to be good news, the impact of sequester – $85 billion in automatic spending cuts that are scheduled to begin in early March – on America’s economic growth remains unknown and highly debated. For more economic data see our Economic Notes


Data as of 2/22/13

1-Week

Y-T-D

1-Year

3-Year

5-Year

10-Year

Standard & Poor’s 500 (Domestic Stocks)

-0.3%

6.3%

11.6%

11.0%

2.3%

6.2%

10-year Treasury Note (Yield Only)

2.0

N/A

2.0

3.8

3.8

3.8

Gold (per ounce)

-2.2

-6.9

-10.0

12.2

10.8

16.1

DJ-UBS Commodity Index

-1.8

-1.7

-7.8

0.6

-8.0

0.9

DJ Equity All REIT TR Index

0.1

5.1

17.9

20.2

7.5

12.6

 

It’s important to look at more than tuition and fees when planning for college.

That’s because tuition and fees account for just about 39 percent of the total budget for students who live on campus at public four-year state colleges and universities. Tuition and fees are about 20 percent of the budget for students who live off campus at public two-year state colleges and universities.

If that’s an unwelcome surprise, you won’t be thrilled to learn that during the 2012-2013 school year the average college budget for a student who lived on campus and attended an in-state, four-year public institution and was more than $22,000. That budget included:

  • Tuition and fees
  • Room and board
  • Books and supplies
  • Transportation
  • Other expenses

On average, the same items for a student who commuted to a two-year, in-state public college ran about $15,500. At a private non-profit, four-year college or university the average budget was more than $43,000.

Making college possible…  So, how do students and their families afford college? The good news is that financial aid is available for many. Total financial aid for full-time students was more than $14,000 on average during the 2011-2012 academic year (the most recent data available). In addition, according to the College Board, undergraduate students received financial assistance from a variety of sources:

  • 39 percent received federal loans and work/study
  • 26 percent received Pell and other federal grant programs
  • 18 percent received institutional grants
  • 9 percent received federal education tax credits and deductions
  • 5 percent received state grants
  • 4 percent received private or employer grants

Is it worth it?…  Scrimping and saving to pay for college often has a significant pay off. The median income for a person with a bachelor’s degree who worked full-time, year-round in 2008 was almost $56,000. That’s about $22,000 more than the median income for a high school graduate. In addition, the unemployment rate for college graduates was significantly lower than that of high school graduates during 2008 (the most recent data available).

If you would like to learn more about the Financial Planning aspects of a college education please visit our Education Planning webpage.Or our Resource Library 

Weekly Fun – First Fridays at Buttonwood Art Space

There may be snow on the ground outside but at Buttonwood Art Space we are excited to open out “Spring Potpourri” exhibit for the Greater Kansas City Art Association!  The exhibit is a juried member show featuring artworks created in all mediums, genre and styles. The Buttonwood gallery will be host to the exhibit of more than 75 amazing works of art from February 1st through March 29, 2013.

A special feature of the Opening First Friday Reception on March 1st will be the live auction of several artworks to fund the GKCAA Annual Art Student Scholarship. Join us at the reception for light appetizers & beverages provided by The Kansas City Club and bid at the auction for a special piece for your home or office. 

For additional information, or a preview of the Art, please visit Buttonwood Art Space. We hope to see you Friday!