"Kee" Points with Jim Kee, Ph.D.

  • Then and Now: Comparing 1998 to 2018
  • A Quick Point on Trade

I generally try to avoid a lot of numbers in Kee Points unless it is really interesting stuff, and I hope you will consider the first paragraph below really interesting stuff. It is just a quick look at how some things have changed over the past 20 years, based upon an article in Investment News and citing multiple sources (e.g. U.S. Department of Labor, U.S. Department of the Treasury, U.S. Bureau of Labor Statistics, etc.):

Then and Now: Comparing 1998 to 2018

What does the world look like now compared to twenty years ago? In 1998, the federal minimum wage was $5.14, while today it is $7.25 (a 40% increase, just below the 55% cumulative rate of inflation). The median U.S. home sales price was $153,000, today it is $325,200. That is more than double, which is similar to college tuition, which has gone from $5,020 at a public school in 1998 ($22,710 private) to $10,230 ($35,830 private) in 2018. GDP has gone from $8.8 trillion to $20.5 trillion, an increase of nearly 2 ½ times, which is similar to the stock market, which has gone from 1,017 in 1998 to 2,708 today (an increase of 2.7 times). Health care premiums have more than tripledfrom $2,100 single ($5,523 family) to $6,896 single ($19,616 family). And the national debt has quadrupled, from $5.4 trillion to $21.7 trillion. Incidentally, twenty years ago the 10-year Treasury yield was 4.77%; today it is 3.14%.

A Quick Point on Trade 

Wealth is created by production and exchange, so trade (exchange) is important, particularly for growth companies. That’s because growth companies and their valuations are more about the future than the present, and most growth companies in the U.S. include international expansion as a key component to their future growth plans. That is why growth stocks are so sensitive to Trump/China trade news. A lot of analysts that just look at a country’s trade (exports and imports) as a percentage of its GDP miss this insight. Having said that, we are China’s largest single country export market (though Asia is their largest export region). Not so for the U.S.; our largest export market is Europe, and the goods we sell to Europe are higher margin (more profitable) than what we sell to China. So trade between the U.S. and China is important, but probably a little more so to China than to the U.S. For that reason, I think you’ll see some near-term (next few months) agreements between the U.S. and China and their President Xi Jinping. But I also think trade strife between the two countries will be an ongoing part of the longer-term (multi-year) picture, kind of like European debt problems.