Three images that caught my attention last week:
New car prices from $50,000. Check out this graph from Sherwood News:
The average cost of a new car is now $50,000!
The Washington Post notices that more than 60 models now have average prices over $75,000.
Crazy right?
Some of this is due to inflation. New vehicle prices are about 22% higher in the 2020s.
Part of that is due to the fact that the technology in new vehicles is much better. There are all kinds of sensors, cameras, screens and self-driving features. Plus, you now get Apple CarPlay in almost every new vehicle. This all costs more money.
Part of that is due to the fact that more and more people are driving trucks and SUVs than ever before.
Add it all up and a new vehicle is much more expensive than ever before.
The good news is that vehicles last much longer than in the past.
The bad news is that many people are stretching out to buy these new $50,000 vehicles by taking out an 84-month car loan to make it work.
Unless everyone starts driving sedans again, this is the new normal.1
If you buy new, you have to get used to higher prices.
Young people are all active in the stock market. When the pandemic hit, it was clear there would be unintended consequences. What wasn’t clear is what those unintended consequences would be.
Here’s one I never could have imagined when we essentially shut down the economy in March 2020: Young people are participating in the stock market like never before (via Daily card book):
The cynic would say this will end badly once the stock market turns.
I have more of a glass-is-half-full view of the fact that people under 40 are all participating in the stock market.
This is wonderful news. Young people have the most important thing they need when investing: time.
Talk to any older investor and they will undoubtedly tell you that their biggest regret is not getting started sooner. Starting early is half the battle.
Sure, some of these young investors are learning bad habits. That will never go away.
The fact that so many young people can grow their wealth in the stock market for decades to come is great news.
Health and wealth inequality. Between now and 2050, the number of Americans aged 65 and older is estimated to increase by 40%.
With 70 million baby boomers, this means that many people will live to an old age and that many people will need care in the coming years.
There was a story in the Boston sphere about how most people are unprepared for growing older. I’ve seen studies before showing that wealthier people live longer, but the data was staggering:
The richest top 10% generally live nine years longer than the poorest 20%. The mortality rate for the poorest quintile is double that of the highest decile.
There are reasons for these differences.
People with more money generally have better access to health care, have better living conditions, can afford to live healthier lifestyles, and enjoy generational benefits such as better access to education. Additionally, financial stability can reduce stress in your life.
This does not apply to everyone, but it is clear that in the coming years we will see that wealth inequality will lead to health inequality.
Further reading:
84 month car loans?!
1My local Honda dealer has the latest Accord for an MSRP of $28,295 for the standard trim.
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