Latest news with #JPMorganChase
The Guardian
26 minutes ago
- General
- The Guardian
Amid attacks on DEI, a US nonprofit offers reparations, education and healing: ‘We're looking to fill the gap'
When Ashley Robinson and her mother took DNA tests 10 years ago and began meeting long lost cousins, they stumbled across a surprising family history that changed their lives. Robinson's lineage traced back to the 272 West Africans who were enslaved by Jesuits and sold to plantation owners in the southern US in 1838. The sale of the enslaved Africans helped fund Georgetown University, the oldest Jesuit higher education institution in the US, and served as collateral to the now defunct Citizens Bank of New Orleans, whose assets were later folded into JPMorgan Chase. Robinson dived into researching her lineage after having her first child at 21 years old, and soon enrolled in an organization called the GU272 Descendants Association, which hosts genealogical workshops and connects people whose ancestors were sold by Georgetown University. While national discussions around reparations for the descendants of enslaved Africans have largely stalled, Robinson's uncovering of her family's history met an unlikely resolution. During her senior year in undergraduate school, she received a scholarship funded by the successors of her family's enslavers. 'I remember praying after I finished the [scholarship] application,' Robinson said. As a 29-year-old mother of three, Robinson considered taking a break from school due to financial constraints. 'It was perfect timing, because the scholarship came about, and that's sailing me through the end of my degree.' The $10,000 from the nonprofit Descendants Truth & Reconciliation Foundation has helped minimize the federal student loans that Robinson needs to complete her computer science degree at University of Maryland Global Campus by the end of the year. For Robinson, the scholarship has meant that she 'will be able to finish school without taking food from the table or having to figure out what we're going to do next'. Based in Baton Rouge, Louisiana, The Descendants Truth & Reconciliation Foundation is a partnership between the descendants of West Africans enslaved by Jesuits and the church's successors, aimed to address the wrongs of the past by focusing on three pillars: education, honoring elders and addressing systemic racism. The descendants partnered with the Thurgood Marshall College Fund to issue post-secondary educational scholarships for descendants of Jesuit enslavement at institutions of their choice. Since the fall of 2024, the foundation has awarded more than $170,000 in scholarships to 25 students across 20 schools, with students being eligible to renew scholarships every year. As Donald Trump's administration has targeted diversity, equity and inclusion efforts at the federal level by cancelling grant programs that benefit people of color, the foundation has successfully championed reparations in the private sector. 'We're looking to fill the gap where these institutions are somewhat hesitant or unsure how they're going to be able to support those communities,' the foundation's president and CEO, Monique Trusclair Maddox said. Bishops reckoning with their church's history of slavery in the UK are also looking to the foundation's truth and reconciliation efforts. 'Teaching this history through Jesuit institutions, allowing dialogue to come in places that wouldn't otherwise be afforded is something that hasn't been done in the past,' Trusclair Maddox said. 'We believe that that whole approach to changing how people look at racism and how people look at marginalized communities is something that will last for a long time.' The Society of Jesus, also known as the Jesuits, were slaveowners until the mid-1800s, relying on forced labor to expand their mission throughout North America. When Georgetown University faced financial difficulties, the Jesuits sold more than 272 enslaved people from five tobacco plantations in Maryland to Louisiana plantation owners to help pay off the school's debts. More than 100 of the enslaved people were sold to other owners, or remained in Maryland by escaping or by having spouses on nearby plantations. The sale that generated the current-day equivalent of $3.3m tore apart families and communities, and in turn, helped form the Georgetown University that's known today. Georgetown and the church's sordid past was largely forgotten until a descendant uncovered it while researching her genealogy in 2004. Over several years, genealogists dug up additional research on the enslaved people, as descendants formed their own groups to learn more about their ancestors. Then starting from August 2018 to the fall of 2019, about 15 representatives altogether from the Society of Jesus, Georgetown University and the descendants gathered together over multiple joint meetings with a facilitator and truth and racial healing practitioner hosted by the Kellogg Foundation. Through their difficult conversations, they created a memorandum of understanding that created the scaffolding for the foundation and laid out the Jesuits' commitments. When Father Timothy Kesicki, a Jesuit priest and chair of the Descendants Truth & Reconciliation Trust learned about the descendants, he said that it transformed his understanding of history: 'I almost had a 180 degree turn on it, because suddenly it wasn't a past story. It was a living memory, and it begged for a response.' The year-long conversations that unfolded between the Jesuits and descendants were raw and full of challenging emotions. 'The whole thing was painful for everybody. This is a historic trauma. It was very hard for Jesuits. It's very easy to be trapped by shame and fear and a prevailing sentiment out there that says: 'Why are you digging up the past?'' said Kesicki. 'We were understanding the truth differently than our preconceived notions, there was a power and a beauty to it also.' After tracing her own family history back to those who were enslaved by the Jesuits in 2016, Trusclair Maddox attended an apology ceremony at Georgetown University where she met other descendants of Jesuit enslavement the following year. She soon joined as a board member of GU272, before taking over the helm of the Descendants Truth & Reconciliation Foundation in 2024. The Jesuits agreed to commit the first $100m to the foundation, and so far have contributed more than $45m, some of which came from the sale of former plantation land. Georgetown University also committed $10m to the trust. Half of the funding is designed to provide educational scholarships and home modifications for elderly descendants, and the other half of their dollars will go toward projects devoted to racial healing. The first racial healing grant funded an art display in New Orleans on Juneteenth. The exhibit will go to the Essence Festival in New Orleans, and Cleveland, Ohio. The foundation is also considering creating a grant for victims of fires in California, which would be open to all. Along with the educational pillar, the foundation also helps seniors by hiring occupational therapists to do an assessment of the safety needs in their home, and then a remodeler installs features such as grab bars and railings. The foundation is now piloting its program in descendant homes in Louisiana, Texas, Mississippi and Ohio, with plans to grow nationally. In spite of the anti-DEI rhetoric nationally, Trusclair Maddox said that support from individual donors has increased by 10% in recent months, and they've also received donations from more anonymous donors. Benefactors have shared with the foundation that their work is needed now more than ever. The program is also being used as a model for truth and reconciliation throughout the world. Last September, Kesicki and Trusclair Maddox presented their programs to the College of Bishops in Oxford, who were grappling with their own history of slavery in England. After the presentation, the College of Bishops sent a video expressing gratitude about what they learned over the two days. 'We're transforming their church,' Trusclair Maddox said, 'not just what we're doing here in the US.' The foundation is also working to educate young Jesuits and descendants on their shared history and to instil in them a respect for their collective future. Starting in late June, about 15 people – a combination of Jesuits and descendants – from throughout the nation will discuss racial healing in-person in Baton Rouge, Louisiana, and through Zoom throughout the summer. A descendant will lead discussions on race relations and teach about the history of the Jesuits and enslavement, as well as Jim Crow policies. Trusclair Maddox foresees the foundation helping future generations reckon with the past in perpetuity. 'The heirs of enslavers and the descendants of those who were enslaved have come together, not from a litigious perspective, but from a moral perspective, and joined hands and hearts together to walk this path. As painful as it may be together, we believe that shows some hope,' Trusclair Maddox said. 'There is a possibility for a greater America. There's a possibility for people to not live in fear.'
Globe and Mail
42 minutes ago
- Business
- Globe and Mail
Bold Prediction: 2 Bank Stocks That Will Be Worth More Than JPMorgan Chase 20 Years From Now
JPMorgan Chase (NYSE: JPM) is a massive financial institution with more assets than any other U.S. bank and an $804 billion market cap. To be perfectly clear, it is a remarkable business with fantastic leadership. Having said that, while I think JPMorgan Chase will continue to grow over the coming years, I don't necessarily think it will be on top of the industry forever. While there's no way to know what the banking industry or U.S. economy will look like in a couple of decades, there are some companies that have massive opportunities and the potential to grow rapidly. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » I realize this is a bold prediction. There's a lot that needs to go right for any other bank stock to get close to JPMorgan Chase's market cap. But if we're looking at a time frame of 20 years, these two have a better chance than many experts think. A highly profitable bank with some interesting possibilities As of this writing, Capital One (NYSE: COF) has a $135 billion market cap, so it would have to outpace JPMorgan Chase by about 500% to overtake it. But in a 20-year period, that's certainly within the realm of possibilities. For one thing, Capital One doesn't necessarily need to grow its business to the size of JPMorgan Chase. Because of its credit card and auto lending focus, Capital One has far better net-interest margins. The bank has done an excellent job of innovating and is the third-largest player in the credit card industry with about $850 billion in credit card purchase volume last year. But after its recent acquisition of Discover, it has the number one share in credit card loans. Over the past decade alone, Capital One's credit card spending volume has more than tripled, so there's excellent growth momentum here. Furthermore, Capital One has about $470 billion in total deposits, about one-fourth of what JPMorgan Chase has today. Capital One has done an excellent job of not only modernizing the branch-based banking experience but has also been the first major bank to offer high-yield deposit products to branch customers. I could see its deposit growth outpacing its big-bank competitors over the coming years. Finally, one factor that could help catapult Capital One to the next level is that it is now the only large U.S. consumer-facing bank to have its own payment network. At first, this will be mostly useful to avoid paying companies like Visa and Mastercard interchange fees on its own card products, but over time there could be interesting possibilities to build out the Discover network as a truly competitive alternative to the payment-processing giants. An app that could replace your bank, broker, and more The Capital One prediction is certainly bold, but there's a clear path to get there, especially if the Discover network truly gains traction as a globally competitive payment network. But this next one is admittedly a bit of a stretch. SoFi (NASDAQ: SOFI) has a market cap of about $18.4 billion today, which means that JPMorgan Chase is roughly 44 times as valuable. But if SoFi can keep its momentum going, grow its brand recognition, and continue to build out its ecosystem, it could be a massive long-term winner. Management has said that the goal is to become a top 10 financial institution, which would require it to grow more than 10X from its current asset size, so the bank's leadership team is certainly aiming high. While other personal finance apps aim to do one or two things better than traditional banks, such as offering high-yield savings accounts or a stock-trading platform, SoFi is building a true bank replacement. The ultimate goal is for SoFi to be able to do everything your current bank, brokerage, insurance agent, and other financial services businesses do -- all in one app and better than the legacy providers. The company's growth momentum has been impressive to say the least. Its membership base has tripled over the past three years, and SoFi (which only received a banking charter in 2022) has grown its deposit base from zero to $27 billion. There are several major catalysts that could take SoFi to the next level. The third-party loan platform is one big example that is growing fast. It's where SoFi originates loans on behalf of third-party partners and makes applicant referrals, generating a low-risk stream of fee income from the massive personal loan industry. SoFi's home loan business is another example. Even in a terribly slow real estate market with elevated interest rates, SoFi originated nearly six times the home loan volume in the first quarter than it did two years ago. With Americans sitting on more equity ($35 trillion) and pent-up home-buying demand than ever, this could be a massive opportunity. Cryptocurrency is a recent development that could bring more customers into SoFi's ecosystem. The bank recently announced that not only will it be bringing crypto trading back to its app by the end of the year but will use blockchain technology to facilitate cross-border money transfers quicker and more cost effectively than peers, and this is a $93 billion market. These are meant to be bold predictions As a final thought, keep in mind that these are meant to be two bold predictions. There's a lot that would need to go well for either of these companies to overtake JPMorgan Chase's position as the most valuable U.S. bank. It's possible, but it's not especially likely. However, even if JPMorgan Chase remains the largest U.S. bank in two decades, that's OK. These are two well-run banks with massive market opportunities, and I'm quite confident that they'll deliver strong returns for investors over the long term. I own both in my personal stock portfolio and can't wait to watch their next chapters unfold. Should you invest $1,000 in Capital One Financial right now? Before you buy stock in Capital One Financial, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Capital One Financial wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $704,676!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $950,198!* Now, it's worth noting Stock Advisor 's total average return is1,048% — a market-crushing outperformance compared to175%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 23, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. Matt Frankel has positions in Capital One Financial and SoFi Technologies. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Capital One Financial. The Motley Fool has a disclosure policy.
Yahoo
an hour ago
- Business
- Yahoo
Bold Prediction: 2 Bank Stocks That Will Be Worth More Than JPMorgan Chase 20 Years From Now
JPMorgan Chase is the largest bank by market capitalization in the United States. Capital One has grown impressively, and has superior margins and some big potential catalysts. SoFi has massive potential to grow and monetize its customer base. 10 stocks we like better than Capital One Financial › JPMorgan Chase (NYSE: JPM) is a massive financial institution with more assets than any other U.S. bank and an $804 billion market cap. To be perfectly clear, it is a remarkable business with fantastic leadership. Having said that, while I think JPMorgan Chase will continue to grow over the coming years, I don't necessarily think it will be on top of the industry forever. While there's no way to know what the banking industry or U.S. economy will look like in a couple of decades, there are some companies that have massive opportunities and the potential to grow rapidly. I realize this is a bold prediction. There's a lot that needs to go right for any other bank stock to get close to JPMorgan Chase's market cap. But if we're looking at a time frame of 20 years, these two have a better chance than many experts think. As of this writing, Capital One (NYSE: COF) has a $135 billion market cap, so it would have to outpace JPMorgan Chase by about 500% to overtake it. But in a 20-year period, that's certainly within the realm of possibilities. For one thing, Capital One doesn't necessarily need to grow its business to the size of JPMorgan Chase. Because of its credit card and auto lending focus, Capital One has far better net-interest margins. The bank has done an excellent job of innovating and is the third-largest player in the credit card industry with about $850 billion in credit card purchase volume last year. But after its recent acquisition of Discover, it has the number one share in credit card loans. Over the past decade alone, Capital One's credit card spending volume has more than tripled, so there's excellent growth momentum here. Furthermore, Capital One has about $470 billion in total deposits, about one-fourth of what JPMorgan Chase has today. Capital One has done an excellent job of not only modernizing the branch-based banking experience but has also been the first major bank to offer high-yield deposit products to branch customers. I could see its deposit growth outpacing its big-bank competitors over the coming years. Finally, one factor that could help catapult Capital One to the next level is that it is now the only large U.S. consumer-facing bank to have its own payment network. At first, this will be mostly useful to avoid paying companies like Visa and Mastercard interchange fees on its own card products, but over time there could be interesting possibilities to build out the Discover network as a truly competitive alternative to the payment-processing giants. The Capital One prediction is certainly bold, but there's a clear path to get there, especially if the Discover network truly gains traction as a globally competitive payment network. But this next one is admittedly a bit of a stretch. SoFi (NASDAQ: SOFI) has a market cap of about $18.4 billion today, which means that JPMorgan Chase is roughly 44 times as valuable. But if SoFi can keep its momentum going, grow its brand recognition, and continue to build out its ecosystem, it could be a massive long-term winner. Management has said that the goal is to become a top 10 financial institution, which would require it to grow more than 10X from its current asset size, so the bank's leadership team is certainly aiming high. While other personal finance apps aim to do one or two things better than traditional banks, such as offering high-yield savings accounts or a stock-trading platform, SoFi is building a true bank replacement. The ultimate goal is for SoFi to be able to do everything your current bank, brokerage, insurance agent, and other financial services businesses do -- all in one app and better than the legacy providers. The company's growth momentum has been impressive to say the least. Its membership base has tripled over the past three years, and SoFi (which only received a banking charter in 2022) has grown its deposit base from zero to $27 billion. There are several major catalysts that could take SoFi to the next level. The third-party loan platform is one big example that is growing fast. It's where SoFi originates loans on behalf of third-party partners and makes applicant referrals, generating a low-risk stream of fee income from the massive personal loan industry. SoFi's home loan business is another example. Even in a terribly slow real estate market with elevated interest rates, SoFi originated nearly six times the home loan volume in the first quarter than it did two years ago. With Americans sitting on more equity ($35 trillion) and pent-up home-buying demand than ever, this could be a massive opportunity. Cryptocurrency is a recent development that could bring more customers into SoFi's ecosystem. The bank recently announced that not only will it be bringing crypto trading back to its app by the end of the year but will use blockchain technology to facilitate cross-border money transfers quicker and more cost effectively than peers, and this is a $93 billion market. As a final thought, keep in mind that these are meant to be two bold predictions. There's a lot that would need to go well for either of these companies to overtake JPMorgan Chase's position as the most valuable U.S. bank. It's possible, but it's not especially likely. However, even if JPMorgan Chase remains the largest U.S. bank in two decades, that's OK. These are two well-run banks with massive market opportunities, and I'm quite confident that they'll deliver strong returns for investors over the long term. I own both in my personal stock portfolio and can't wait to watch their next chapters unfold. Before you buy stock in Capital One Financial, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Capital One Financial wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $704,676!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $950,198!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 175% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 23, 2025 JPMorgan Chase is an advertising partner of Motley Fool Money. Matt Frankel has positions in Capital One Financial and SoFi Technologies. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Capital One Financial. The Motley Fool has a disclosure policy. Bold Prediction: 2 Bank Stocks That Will Be Worth More Than JPMorgan Chase 20 Years From Now was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Sun
an hour ago
- Business
- The Sun
Trump's policy shifts fuel market uncertainty despite record highs
AS Wall Street puts April's tariff shakeout in the rearview mirror and indexes set record highs, investors remain wary of U.S. President Donald Trump's rapid-fire, sometimes chaotic policymaking process and see the rally as fragile. The S&P 500 and Nasdaq composite index advanced past their previous highs into uncharted territory on Friday. Yet traders and investors remain wary of what may lie ahead. Trump's April 2 reciprocal tariffs on major trading partners roiled global financial markets and put the S&P 500 on the threshold of a bear market designation when it ended down 19% from its February 19 record-high close. This week's leg up came after a U.S.-brokered ceasefire between Israel and Iran brought an end to a 12-day air battle that had sparked a jump in crude prices and raised worries of higher inflation. But a relief rally started after Trump responded to the initial tariff panic that gripped financial markets by backing away from his most draconian plans. JP Morgan Chase, in the midyear outlook published on Wednesday by its global research team, said the environment was characterized by 'extreme policy uncertainty.' 'Nobody wants to end a week with a risk-on tilt to their portfolios,' said Art Hogan, market strategist at B. Riley Wealth. 'Everyone is aware that just as the market feels more certain and confident, a single wildcard policy announcement could change everything,' even if it does not ignite a firestorm of the kind seen in April. Part of this wariness from institutional investors may be due to the magnitude of the 6% S&P 500 rally that followed Trump's re-election last November and culminated in the last new high posted by the index in February, said Joseph Quinlan, market strategist at Bank of America. 'We were out ahead of our skis,' Quinlan said. A focus on deregulation, tax cuts and corporate deals brought out the 'animal spirits,' he said. Then came the tariff battles. Quinlan remains upbeat on the outlook for U.S. stocks and optimistic that a new global trade system could lead to U.S. companies opening new markets and posting higher revenues and profits. But he said he is still cautious. 'There will still be spikes of volatility around policy unknowns.' Overall, measures of market volatility are now well below where they stood at the height of the tariff turmoil in April, with the CBOE VIX index now at 16.3, down from a 52.3 peak on April 8. UNSTABLE MARKETS 'Our clients seem to have become somewhat desensitized to the headlines, but it's still an unhealthy market, with everyone aware that trading could happen based on the whims behind a bunch of' social media posts, said Jeff O'Connor, head of market structure, Americas, at Liquidnet, an institutional trading platform. Trading in the options market shows little sign of the kind of euphoria that characterized stock market rallies of the recent past. 'On the institutional front, we do see a lot of hesitation in chasing the market rally,' Stefano Pascale, head of U.S. equity derivatives research at Barclays, said. Unlike past episodes of sharp market selloffs, institutional investors have largely stayed away from employing bullish call options to chase the market higher, Pascale said, referring to plain options that confer the right to buy at a specified future price and date. Bid/ask spreads on many stocks are well above levels O'Connor witnessed in late 2024, while market depth - a measure of the size and number of potential orders - remains at the lowest levels he can recall in the last 20 years. 'The best way to describe the markets in the last couple of months, even as they have recovered, is to say they are unstable,' said Liz Ann Sonders, market strategist at Charles Schwab. She said she is concerned that the market may be reaching 'another point of complacency' akin to that seen in March. 'There's a possibility that we'll be primed for another downside move,' Sonders addded. Mark Spindel, chief investment officer at Potomac River Capital in Washington, said he came up with the term 'Snapchat presidency' to describe the whiplash effect on markets of the president's constantly changing policies on markets. 'He feels more like a day trader than a long-term institutional investor,' Spindel said, alluding to Trump's policy flip-flops. 'One minute he's not going to negotiate, and the next he negotiates.' To be sure, traders seem to view those rapid shifts in course as a positive in the current rally, signaling Trump's willingness to heed market signals. 'For now, at least, stocks are willing to overlook the risks that go along with this style and lack of consistent policies, and give the administration a break as being 'market friendly',' said Steve Sosnick, market strategist at Interactive Brokers.
Forbes
2 hours ago
- Business
- Forbes
Our 8% Dividend Playbook For The $36-Trillion Debt Panic
The words "Government Debt" with hundred dollar bills in the background. 'Those are some crazy numbers.' An old friend had messaged me, and that line caught my attention. As it turned out, he had 36 trillion numbers in mind: the national debt, in other words. That is a pretty striking figure, and it's fair to ask how the country's debt could go from a trillion dollars back in 1981 to 36 times that today. 'Very irresponsible, imo,' my friend wrote. This sounds like a reasonable response, and many people think this way. But the problem here, from an investment perspective, is that most people look at the debt on its own, without considering the many other factors we're going to delve into today. My quick take: The rising US government debt load is not a good reason to avoid stocks, or, in our case, the 8%+ yielding closed-end funds (CEFs) that hold our favorite stocks. I'm talking about funds holding strong blue chips that form the backbone of the country's economy, like Visa (V), JPMorgan Chase & Co. (JPM) and NVIDIA (NVDA). Beyond Alarmist Debt Headlines Now it is absolutely true that too much debt is unsustainable, and the US government isn't accountable for this debt—we taxpayers are. But there's more to the story than this. In 2017, total government debt hit $20 trillion. That, by the way, was the last time I wrote in-depth on this topic. I still feel the same way I did then: that the US government is actually financially healthier than the average American. That's because then, as now, people tended to look at the debt in isolation (a common mistake!). But the US government has plenty of tools it can use—and trends working in its favor—that make it easier to manage its debt than many people think. Let's start with a key number: the amount of revenue the government collects in a year through taxes and other fees. Today, as in 2017, about 18% of US GDP goes to the federal government. That's $5.2 trillion, at the current size of the US economy. Looked at another way, if Uncle Sam were to divert all of that revenue to paying off the debt (which is impossible, obviously, but stick with me for a second), he'd do so in about six-and-a-half years. Here's the key point, though: That six-and-a-half years is only slightly higher than the six years it would've taken in 2017. And let's not forget that we had a pandemic in there, which caused a big spike in public debt. So, viewed that way, government debt has remained about as manageable as it was eight years ago, and it would likely be more manageable if COVID hadn't come along. Now let's go one step further and stack up debt and GDP growth: Debt/GDP Chart Both federal debt and GDP were growing at almost the same rate before the pandemic, which, as we just discussed, caused a bump in debt. And, of course, GDP took a hit then, too, with the economy in lockdown. As a result, GDP has grown about 55% in the last eight years or so, while total debt has grown about 80%. Obviously, this means America's debt-to-income ratio is worse than it was before the pandemic. But that's not because of a structural issue. We can point at the pandemic as the main cause here, in this case. Still, a one-time hit could be trouble in the long run, right? Sure, but look at this chart. Debt/GDP 2017 The extra government debt due to the COVID-19 crisis looks bad because the numbers are huge, but if we compare it to the bump, and continued accelerated rise, in indebtedness sparked by the 2008/2009 financial crisis, the 2020 debt increase is rather small, as you can see below. Debt Crisis Before 2008, the ratio of US public debt to GDP was around 35%, and in less than five years, it doubled to 70%, where it remained until the pandemic, after which it went above 100% before falling to 96%, where it is now. On a relative basis, the jump in 2008 was clearly worse than in 2020. Yet America survived just fine. So there's no reason to worry, unless and until this chart changes direction. Labor Productivity Above is the real story: labor productivity. It's risen by a third since 2007, meaning Americans now produce about $1.33 in value for every dollar they produced back in 2007. And note how that's been a pretty stable line upwards? America keeps producing more effectively and efficiently: This is progress, growth and prosperity. And now we have AI, which is likely to give productivity another boost. This also explains why the S&P 500 has delivered 10.4% annualized returns over the last two decades, in line with the 10.3% annualized returns it's delivered over the last century. And, yes, during that time, the federal debt grew, as did the US government's income, thanks to higher US productivity producing higher GDP. So if you're thinking of cutting back on your US holdings due to the debt, remember these three things: Instead, now is the time to boost our holdings in the US, and doing so through CEFs yielding 8%+ is hands-down the best way to do it. With CEFs, we get exposure to strong blue chips like the ones I mentioned earlier, often at a discount, since these funds' market prices can—and often do—trade for less than the value of their portfolios. That's our 'discount to NAV' in CEF-speak. Big dividends and big discounts from S&P 500 stocks. Try getting that from an index fund or by buying these stocks 'direct.' It's just not possible. And any fear—and hence bigger discounts—caused by overwrought debt worries just makes our opportunity even sweeter. Michael Foster is the Lead Research Analyst for Contrarian Outlook. For more great income ideas, click here for our latest report 'Indestructible Income: 5 Bargain Funds with Steady 10% Dividends.' Disclosure: none
