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U.S. States Spending the Most on Welfare

The top 15 US states that spend the most on welfare may surprise you. We also compare local spend versus state spend, as well as other public welfare….

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In its first year, the Biden Administration has embarked on an aggressive domestic agenda intended to offer a variety of economic support to lower and middle-class Americans. The American Rescue Plan, passed in March, included direct payments to U.S. households, new investments into safety net programs like food stamps and unemployment, and increases to the Earned Income Tax Credit and Child Tax Credit.

The Biden Administration followed this just a few weeks later with two proposals, the American Jobs Plan and the American Families Plan, which would dramatically scale up federal spending on a variety of programs for infrastructure, job creation, education, child care, health, food assistance, and tax relief.

Biden’s agenda has prioritized a strong role for the federal government, in offering financial support to needy Americans and creating pathways to the middle class.

This agenda would represent a new chapter for the U.S. welfare state, building beyond the New Deal programs introduced in the 1930s and the Great Society programs enacted in the 1960s. These earlier programs created a wide-ranging role for the government in protecting disadvantaged citizens from economic harm.

Public welfare now encompasses a variety of federal, state, and local programs. The term includes federal programs like Social Security and TANF, which offer direct assistance to eligible populations, Medicaid and Medicare, which offer healthcare to low-income and elderly populations, unemployment insurance, and other important support.

Because these programs are typically based on demographic and economic factors, they have grown with shifts in the population and economy over time. According to the Census Bureau, in the last 20 years alone, state and local welfare spending has more than tripled in nominal dollars, rising from $233 billion nationally in 2000 to $743 billion in 2019.

As a share of total spending, welfare spending has risen from 13.4% of state and local budgets at the start of the millennium to 18.8% in 2019. But even on a per capita basis, spending is up nearly 180% over that span.

And in comparison to other budget items, public welfare is now the single largest category of expenditure in state and local budgets.

Welfare spending totals $743 billion, narrowly topping elementary and secondary education spending ($717 billion) and running far ahead of other categories like higher education, highways, and protective services.

While the role of state and local government in welfare spending has grown everywhere, some states invest more than others in welfare programs. There are a variety of reasons why this is the case.

For one, states with more liberal politics may choose to invest a greater amount in social safety net programs, which is why many coastal states have greater per-capita welfare spending, led by New York at $4,094.

Another source of disparities between states is their underlying population or economic characteristics. For instance, states like Arkansas, West Virginia, and Kentucky all spend more than a quarter of their budgets on welfare spending, which is likely due to the fact that they have greater populations of low-income residents who are eligible for state-administered federal assistance programs like TANF or Medicaid.


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To determine the states spending the most on public welfare, researchers at Commodity.com calculated total state and local welfare spending per person using the most recent data available from the U.S. Census Bureau. Public welfare spending includes cash assistance payments, vendor payments, and other uncategorized payments administered by state and local governments.

Here are the states spending the most on welfare.

U.S. States Spending the Most on Welfare Per Capita

Photo Credit: Sean Pavone / Shutterstock

15. Maine

  • State & local welfare spending per capita: $2,615
  • State & local welfare spending as a share of total spending: 25.6%
  • Total state & local welfare spending: $3,530,545,000
  • Cash assistance payments: $51,375,000
  • Vendor payments: $2,473,329,000
  • Other public welfare: $1,005,841,000
Photo Credit: f11photo / Shutterstock

14. Kentucky

  • State & local welfare spending per capita: $2,640
  • State & local welfare spending as a share of total spending: 25.3%
  • Total state & local welfare spending: $11,820,221,000
  • Cash assistance payments: $171,832,000
  • Vendor payments: $10,704,128,000
  • Other public welfare: $944,261,000
Photo Credit: Paul Brady Photography / Shutterstock

13. Delaware

  • State & local welfare spending per capita: $2,681
  • State & local welfare spending as a share of total spending: 20.5%
  • Total state & local welfare spending: $2,645,564,000
  • Cash assistance payments: $36,586,000
  • Vendor payments: $2,276,331,000
  • Other public welfare: $332,647,000
Photo Credit: Sean Pavone / Shutterstock

12. West Virginia

  • State & local welfare spending per capita: $2,708
  • State & local welfare spending as a share of total spending: 25.7%
  • Total state & local welfare spending: $4,832,936,000
  • Cash assistance payments: $49,058,000
  • Vendor payments: $4,083,045,000
  • Other public welfare: $700,833,000
Photo Credit: evenfh / Shutterstock

11. Louisiana

  • State & local welfare spending per capita: $2,723
  • State & local welfare spending as a share of total spending: 24.8%
  • Total state & local welfare spending: $12,647,298,000
  • Cash assistance payments: $27,185,000
  • Vendor payments: $11,793,321,000
  • Other public welfare: $826,792,000
Photo Credit: Sean Pavone / Shutterstock

10. Pennsylvania

  • State & local welfare spending per capita: $2,787
  • State & local welfare spending as a share of total spending: 22.3%
  • Total state & local welfare spending: $35,628,431,000
  • Cash assistance payments: $1,591,270,000
  • Vendor payments: $28,550,353,000
  • Other public welfare: $5,486,808,000
Photo Credit: Jon Bilous / Shutterstock

9. Oregon

  • State & local welfare spending per capita: $2,861
  • State & local welfare spending as a share of total spending: 20.1%
  • Total state & local welfare spending: $12,135,117,000
  • Cash assistance payments: $255,356,000
  • Vendor payments: $7,309,385,000
  • Other public welfare: $4,570,376,000
Photo Credit: Sean Pavone / Shutterstock

8. Vermont

  • State & local welfare spending per capita: $2,988
  • State & local welfare spending as a share of total spending: 21.5%
  • Total state & local welfare spending: $1,862,528,000
  • Cash assistance payments: $20,775,000
  • Vendor payments: $1,164,720,000
  • Other public welfare: $677,033,000
Photo Credit: Sean Pavone / Shutterstock

7. New Mexico

  • State & local welfare spending per capita: $3,003
  • State & local welfare spending as a share of total spending: 24.2%
  • Total state & local welfare spending: $6,324,770,000
  • Cash assistance payments: $54,620,000
  • Vendor payments: $5,821,877,000
  • Other public welfare: $448,273,000
Photo Credit: Sean Pavone / Shutterstock

6. Minnesota

  • State & local welfare spending per capita: $3,012
  • State & local welfare spending as a share of total spending: 23.6%
  • Total state & local welfare spending: $17,039,955,000
  • Cash assistance payments: $710,269,000
  • Vendor payments: $13,688,638,000
  • Other public welfare: $2,641,049,000
Photo Credit: ESB Professional / Shutterstock

5. Rhode Island

  • State & local welfare spending per capita: $3,107
  • State & local welfare spending as a share of total spending: 24.0%
  • Total state & local welfare spending: $3,284,006,000
  • Cash assistance payments: $21,856,000
  • Vendor payments: $2,960,598,000
  • Other public welfare: $301,552,000
Photo Credit: Andriy Blokhin / Shutterstock

4. California

  • State & local welfare spending per capita: $3,403
  • State & local welfare spending as a share of total spending: 21.1%
  • Total state & local welfare spending: $133,978,520,000
  • Cash assistance payments: $6,917,786,000
  • Vendor payments: $108,643,810,000
  • Other public welfare: $18,416,924,000
Photo Credit: Andriy Blokhin / Shutterstock

3. Massachusetts

  • State & local welfare spending per capita: $3,574
  • State & local welfare spending as a share of total spending: 25.0%
  • Total state & local welfare spending: $24,639,146,000
  • Cash assistance payments: $529,154,000
  • Vendor payments: $22,154,310,000
  • Other public welfare: $1,955,682,000
Photo Credit: Marcus Biastock / Shutterstock

2. Alaska

  • State & local welfare spending per capita: $3,811
  • State & local welfare spending as a share of total spending: 18.6%
  • Total state & local welfare spending: $2,786,410,000
  • Cash assistance payments: $119,053,000
  • Vendor payments: $2,323,495,000
  • Other public welfare: $343,862,000
Photo Credit: Victor Moussa / Shutterstock

1. New York

  • State & local welfare spending per capita: $4,094
  • State & local welfare spending as a share of total spending: 21.0%
  • Total state & local welfare spending: $79,165,215,000
  • Cash assistance payments: $2,589,581,000
  • Vendor payments: $65,848,681,000
  • Other public welfare: $10,726,953,000

Detailed Findings & Methodology

The data used in this analysis is from the U.S. Census Bureau’s Annual Survey of State and Local Government Finances and the U.S. Census Bureau’s American Community Survey 1-Year Estimates, covering data from 2019.

To determine the states spending the most on public welfare, researchers calculated total state and local welfare spending per person using the most recent data available.

Public welfare spending includes cash assistance payments, vendor payments, and other uncategorized payments administered by state and local governments.

A full list of definitions from the survey can be found here.

The post U.S. States Spending the Most on Welfare appeared first on Commodity.com.

Economics

“A More Difficult Backdrop Is Emerging”: 5 Reasons Why Goldman Is Starting To Turn Bearish

"A More Difficult Backdrop Is Emerging": 5 Reasons Why Goldman Is Starting To Turn Bearish

Last week’s remarkable bounce in stocks from Monday’s…

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"A More Difficult Backdrop Is Emerging": 5 Reasons Why Goldman Is Starting To Turn Bearish

Last week's remarkable bounce in stocks from Monday's lows which, as a reminder, prompted the first outflow from equities in 2021...

... has sparked many questions among Wall Street's elite where even some of the biggest bulls are puzzled by the market's violent reversal (which, however, was predicted correctly by flow-tracking quants like Nomura's Charlie McElligott).

And it's not just the market's relentless ability to internalize any adverse market action and come out on top as a wave of BTFDers rushes in: as Goldman's strategist Chris Hussey wrote late on Friday, "one thing that is increasingly drawing our attention and was 'front and center' this week is how the economy, policy, and earnings growth appear to be rapidly transitioning away from the initial post-pandemic explosion of accommodation and activity and towards a slower pace as the brakes are pressed on a variety of key parts of the growth machine."

As Hussey further notes, growth is fine for now and even robust, with Goldman's economists forecasting over 4.5% GDP growth forecast to extend into 2022, but as he cautions "a developed economy like the US cannot grow at a 9% pace for very long --even as it catches up out of a pandemic."

Meanwhile, as he delineates below, a series of pieces may be falling into place to 'tap the brakes' on some of the torrid growth we have been seeing since vaccines were distributed earlier this year. Among these Goldman focuses on the impact of fading stimulus, supply chains, the virus, China, and even stock valuations which are "coalescing to create a more difficult backdrop for earnings growth and multiple expansion in the months, or at least years ahead."

Here are a few observations on all 5 of these potentially "braking" factors:

1. Stimulus. The FOMC indicated that tapering ‘may soon be warranted’ at this week’s meeting and on the back of the statement, yields on 10-year Treasuries have risen 15 bp to 1.45% while front-end rates have reset notably higher as shown in the chart below.

Interestingly, stocks also rose on the back of the Fed statement, consolidating the rebound from Monday's sell-off. And while the Fed has not done anything yet -- only suggested it is about to -- the wheels do seem to now be in place to wind down the central bank's latest QE program and to eventually start raising rates -- as soon as one year from now. Adding to this point, BofA's Michael Hartnett notes that global tapering has begun (ECB, BoE, BoC, RBA, Fed) which will see a sharp drop in global central liquidity which was $8.5 trillion in 2020, shrinks to $2.1trillion in 2021, and will be just $0.1 in 2022 (putting this in context, since the COVID outbreak central banks have bought $800MM of assets every hour, a number which shrinks to ).

And at the same time monetary policy appears to be shifting from the gas pedal to the brakes, fiscal policy may be as well. As we noted last week, Goldman's political economist wrote this week about the growing risks around the next US federal spending program and the debt limit extension in “Collision Course?” and “More Downside Risks from Washington.”

2. Supply Chains. The inability of companies to source parts, people, and commodities has been a major reason why we have warned about the slowing growth momentum we have observed in recent week. While Goldman is confidence that supply chain constraints are mainly a function of too rapid a recovery in demand, and so see it as a temporary problem, but for homebuilders, automobile manufacturers, and truckers it is all a supply problem today that is putting upward pressure on pricing and potentially downward pressure on margins (although margins have held up quite well so far). Case in point, on August 30 we warned that a slew of profit warnings are coming in the coming weeks, and between FedEx, Nike, PPG, and many others that's just what has happened.

  • Looking at the Homebuilders, Goldman highlights how DRI lowered its November quarter guidance due to an inability to get enough materials and labor while fellow builder LEN is also started fewer communities in the current environment.
  • In Autos, the bank writes that September car sales are tracking about 25% below year-ago levels - that's versus September 2020 and the heart of the pandemic - as dealer inventories are at historically low levels. The good news for car makers: prices are strong -- although this may not be so good for inflation and Fed policy (see #1 above).
  • And finally in Transports, FDX missed earnings this week as it is facing a shortage of truckers and shippers .

3. The virus. In addition to supply chain disruptions, Goldman previously cited the Delta variant as a reason for why they were seeing slower 3Q21 GDP growth when they lowered the bank's economic forecast back on Sep 6. Fast forward two weeks, and the summer wave of the virus does appear to have peaked...

... even in the US South -- as the chart below clearly shows.

Commenting on the chart above, Goldman said that "what we might have learned this summer is that the virus still has the ability to disrupt the pace of growth even among populations with high rates of vaccination. Growth does not appear to have been derailed this summer, but it does appear to be trending slower than most thought it would back on Memorial Day."

4. China. We entered this week with a lot being written about how issues surrounding China's property market are driving a global 'risk-off' sentiment shift. And we exit this week with no resolution to China's property market issues, yet the S&P 500 is UP on the week. But while it turned out that China did not derail the bull market this week, China's property market is still very big (see “The Housing Market Is Almost Frozen" - An Even Bigger Problem Emerges For China"). And uncertainties persist. Perhaps what we continue to discover is that China is no longer the sustained tailwind to global growth that it was back in the years following the Great Financial Crisis when the country was pushing double digit GDP growth rates (see "China Is Responsible For More Than A Third Of World GDP Growth - This Is A Problem".)

5. Valuation. According to Goldman's Hussey, "stock market valuations rarely break under their own weight" and it typically takes some other more fundamental catalyst to cause earnings to decline and investors to pay less for earnings. But as Goldman's Peter Oppenheimer highlighted in a fresh global strategy note this week, stock market returns are likely to be muted going forward relative to past cycles. Why? We are entering the current cycle with high valuations, ultra-low rates, and corporate margin headwinds from rising wages and regulation and the headwinds from de-globalization. And as the bank's chart of the week below illustrates, historically forward 10-year returns for equities have trended lower when they have started at our current elevated valuation.

Goldman's chart of the week: Valuation is not typically the cause of a bubble bursting and stocks can stay ‘expensive’ for a long time. But over a long time, the returns that you might expect to get from investing in equities tend to be far smaller when you buy stocks at high  aluations than when you buy them when they are ‘cheap’.

Tyler Durden Sat, 09/25/2021 - 18:30
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Precious Metals

Is Silver a good buy in October 2021?

Silver extended its correction from the recent highs above $24, and we could see even lower prices in the weeks ahead if the U.S. dollar remains strong….

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Silver extended its correction from the recent highs above $24, and we could see even lower prices in the weeks ahead if the U.S. dollar remains strong. The demand for the dollar continues to grow, although it remained below its weekly high of 0.86 compared to the euro.

Fundamental analysis: Fed Chair Jerome Powell said that interest rates could rise quicker than expected

Since the beginning of September, the silver price has weakened more than 5% and reached the price levels that we had seen in November 2020. The U.S. central bank reported on Wednesday it could begin reducing its monthly bond purchases by as soon as November 2021, which positively influenced the U.S. dollar, and the most significant force behind the silver price slide is the appreciation of the U.S. dollar.

“The U.S. central bank is preparing the ground to possibly begin dialing back some of the extraordinary support it has given the economy during the pandemic. The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff,” Fed Chair Jerome Powell told reporters on Wednesday.

The U.S. Federal Reserve switched to a more hawkish tone, and Fed Chair Jerome Powell said that interest rates could rise quicker than expected by next year. Jerome Powell also said that Fed achieved its goal on inflation, while more than half of Fed members believe that the economy reached the employment goal.

The global business activity is recovering, the U.S. unemployment rate fell to 5.2% in August, and the rapid price increases are also a reason to begin raising rates. The prospect of interest rate hikes positively influences the U.S. dollar, and those whose interest is to invest in precious metals like Silver should have the U.S. dollar on their “watch list.”

Technical analysis: $20 represents a strong support level

Those whose interest is to invest in commodities like Silver should consider that the risk of further decline is still not over.

Data source: tradingview.com

The important support level currently stands at $20, and if the price falls below this level, it would be a firm “sell” signal. The next price target could be around $18 or even below.

On the other side, if the price jumps above $25, it would be a signal to trade Silver, and we have the open way to $27.

Summary

Silver price remains under pressure after the U.S. central bank reported that it could begin reducing its monthly bond purchases by as soon as November. The most important driving force behind the price slide is the appreciation of the U.S. dollar, and investors will continue to pay attention to the U.S. Federal Reserve comments.

The post Is Silver a good buy in October 2021? appeared first on Invezz.

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Economics

Market-Based Indicators of Inflation, Growth and Risk

Medium term inflation expectations are muted, growth expectations are recovering slightly, and perceived risk seems contained. Figure 1: Top panel: Five…

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Medium term inflation expectations are muted, growth expectations are recovering slightly, and perceived risk seems contained.

Figure 1: Top panel: Five year inflation breakeven calculated as five year Treasury yield minus five year TIPS yield (blue), five year breakeven adjusted by inflation risk premium and liquidity premium per DKW (red), all in %. Middle panel: 10 year-3 month Treasury spread (blue), 10 year-2 year Treasury spread (red), both in %. Bottom panel: VIX (teal, left scale), Economic Policy Uncertainty, 7 day centered moving average (salmon, right scale).  NBER defined recession dates shaded gray (from beginning of month after peak month to end of trough month). Source: FRB via FRED, Treasury, KWW following D’amico, Kim and Wei (DKW) , FRED, policyuncertainty.com, NBER and author’s calculations.

The top panel of Figure 1 shows that the standard breakeven for 5 year horizon has stabilized; the adjusted for inflation risk premium/liquidity premium indicator was also stable at end-August, indicating 1.18% inflation on average.

Expectations as proxied by term spreads suggest that growth trends bottomed out in mid-July, after peaking in mid-March. They’re now rising slightly over the last two weeks.

Finally, a market based measure of risk (the VIX) has is relatively quiescent. So too is the newspaper account based Baker-Bloom-Davis measure of policy uncertainty. This is true despite the rising political uncertainty regarding passage of the reconciliation and infrastructure bills, and more importantly, the raising of the debt ceiling. Credit spreads have also failed (so far) to evidence much reaction:

Notes: The ICE BofA High Yield Option-Adjusted Spreads (OASs) are the calculated spreads between a computed OAS index of investment grade bonds BB and below, and a spot Treasury curve.  Source: FRED, accessed 9/25/2021.

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