Household Income at Record High as Fiduciary Rule Enacted
June 10, 2017
U.S. Household income grew to almost $95 trillion, with rapid expansion in Q1 2017. Trade for April, however, dropped, as did the pound against the dollar. The Fiduciary Rule, written to protect those saving for retirement, also partially went into effect.
- Fiduciary rule on track to be fully implemented. The Obama-era retirement-savings rule that will require financial advisors to act in the best interests of their clients partially went into effect. The core principle of the rule is in place, holding those advisors to a fiduciary responsibility, however the operational aspects, like requiring them to disclose conflicts of interest, will not be in effect until January. The previous law governing these entities only required advisors to provide “suitable” guidance, which consumer protection advocates argued allowed for conflicts of interest. Critics of the rule, primarily in the financial services industry, argue that it will reduce access to financial advice and raise costs, especially for those with smaller investments. The White House asked for a review of the rule, to potentially delay or roll it back, however, Labor Secretary Alexander Acosta’s late appointment and seeming support of the rule mean that there are unlikely to be changed. [WSJ]
Economic Indicators & News
- Dollar rises against the pound in wake of U.K. election. The British public surprised markets again by failing to deliver a majority to current Prime Minister Theresa May, causing the pound sterling to drop 2 percent against the dollar. Though May will still lead the government, her lack of a mandate creates uncertainty for Brexit negotiations, which were supposed to start in just over one week. [Reuters]
- U.S. household net worth hits record high. Q1 2017 saw a rise of $2.3 trillion, to $94.8 trillion overall. The growth was largely attributed to rises in the stock market, which contributed $1.3 trillion in wealth. Real estate value and savings accounts were also crucial, increasing by $500 billion and $100 billion, respectively. Household debts increased by $46 billion. [WSJ]
- April wholesale trade drops past estimates in biggest drop in over a year. The Commerce Department reported a drop of 0.5%, compared to an increase of 0.1% in the previous month. The three industries with the highest drops were automotive, paper, and petroleum, with 1.4%, 1.8%, and 5.0% drops, respectively. [Reuters]