A Rising Economy for Physicians

All the signs point to a rising economy for physicians. Enjoy it while it lasts and take this time to structure your finances with your advisors to prepare for other, less desirable economic climates to come.

All the signs point to a rising economy for physicians, but the cost is more regulation and oversight. No free lunch, you know. When Medicare came in 50 years ago, physician incomes jumped and so did the hassle factor. And so it goes. The Affordable Care Act is giving insurance to millions of Americans who will funnel into medical practices, along with more paperwork and complexity.

But for our futures and our retirements, happily the market is up, and up big. We’ve seen a bull run of almost 1,000 days without a 10% decline (the dreaded “adjustment”), which is the fifth longest on record. That’s 32 months compared to the post-1945 average for bull markets is 18 months. But never fear, a downturn is inevitable sooner or later, just don’t act surprised or dismayed when it comes. Sit tight and all will cycle back in (unpredictable) time.

Another sign of economic strength is that donor giving is also up: 7% for education, 6% for the arts, and 5% for health. For 4 years in a row giving is up, ever since the recession gloom passed and pockets opened up again.

And according to the Boston Consulting Group, the number of millionaire households in the US has now reached 16.3%, about 1.1% of the total, especially with real estate rejuvenated. That’s an encouraging sign of the American Dream rising, but the most amazing thing to me is that I remember when being a millionaire was an unobtainable dream—for docs as well.

One might reasonably ask: Where has the bulk of the growth of jobs come from fueling this growth?. Surprisingly, for the opponents of immigration reform in particular, 28% of all new businesses are started by immigrants, and 10% of the population is employed by them. Consider that 376,000 permanent resident visas are available each year, while 4.3 million people languish on the waiting list. A potentially large and viable force of energetic folks is artificially being withheld from bolstering our economy because of outdated and foolish restrictions.

Speaking of new companies and products to fuel an expanding economy, we need to keep in mind the necessity for keeping the pot boiling because the failure rate of new consumer products is 95%, according to a study from Ernst & Young. Research found it takes 3,000 ideas to get 300 of them formalized, 125 into beta testing, 10 officially budgeted, 1.7 launched and just 1 that makes money. I guess pessimists must make poor entrepreneurs.

The one cautionary note to the nation’s rising economy is lurking inflation, waiting to gobble up the buying power of our perceived increased wealth. However, we do have the Federal Reserve watching to alert us of slow inflation’s inevitable rise. And when inflation does go up we might take some comfort that while our buying power will sag, so will the cost of paying off our debts. Every cloud has a silver lining, so they say.

When inflation hits, rising wages to match always lag. Especially, physicians’ reimbursements. And even when incomes do catch up, that alone fuels further inflation. That is why all financial advisors recommend holding stocks/equities that will rise with inflation and offer some protection.

But for now, the nation’s economy for docs is in a sweet spot of rising asset value, the potential of rising incomes and, currently, low inflation. Enjoy it while it lasts and take this time to structure your financial situation with your advisor(s) to get ready for other, less desirable economic climates to come.