On Thursday of this week, almost 200 nations are meeting in Dubai at the COP28 Climate Summit to discuss global warming. The COP28 the participants will focus on how to keep temperatures from climbing any higher. Thus far, the track record is less than encouraging.

 

Over the last eight years, despite pledges from both political and business leaders worldwide to reduce industrial emissions, temperatures have continued to rise. This is in the face of massive efforts both here and abroad to develop and expand solar, wind, and nuclear power alternatives to fossil fuels.

 

Despite these efforts, carbon dioxide emissions and temperatures continue to rise. With that background, the climate summit will be focusing on how to keep their stated goal of keeping world temperature gains below their 1.5-degree Celsius (2.7 degrees Fahrenheit) target.

 

That number, established at the 2009 Copenhagen summit, was officially set as a temperature ceiling goal a year later by the United Nations.

 

In 2015, at the Paris Agreement, 195 countries agreed to hold temperatures below 2 degrees Centigrade, specifically to stay within that 1.5 centigrade level. The 1.5C level is akin to a speed limit for rising temperatures worldwide. Going above that level, scientists believe, would make some impacts of climate change irreversible.

 

It was not an arbitrary data point. Climate scientists arrived at the number by comparing the average global surface temperatures today with those that occurred in the late 1800s before industrialization. The difference between now and then is approximately 1.1 degrees Celsius (2 degrees Fahrenheit).

 

The bad news, according to Copernicus, a European climate service, is that we have already surpassed the 1.5-degree speed limit on at least 127 days this year. That may seem a tiny number to you and me, but when it is added to an overheated planet overall, the impact can be huge. As a result, it is almost a certainty that 2023 will be the hottest year on record.

 

Floods, heat waves, droughts, hurricanes, wildfires — take your pick — we all experienced the changes. Some more than others. 

 

More subtle changes are occurring as well like the change in farmers' growing seasons throughout the world. Fortunately, the ocean, which makes up 70 percent of the earth's surface, absorbed more than 90 percent of the excess heat (and 30 percent of excess carbon dioxide). However, even the oceans are succumbing to the extra heat. Coral reefs are bleaching and crumbling, the polar ice and snow caps are rapidly shrinking and so is marine life.

 

Here in the U.S., the heat is causing accelerated climate change. It is also creating more and more extreme weather events, according to the latest Federal National Climate Assessment. The cost of extreme weather events is at least $150 billion per year in direct damage alone. That total is projected to increase over the near term.  In addition, billion-dollar events are occurring at a far more rapid clip than they did in decades past, according to the report.

 

Today a billion-dollar disaster is occurring every three weeks, as compared to one every four months back in 1980.

 

Unless something changes, the 1.5C threshold will be broken permanently by the early 2030s, according to the Intergovernmental Panel on Climate Change. That would create much worse climate effects and make 2023's weather issues look like child's play in comparison.

 

Do I think something radical will change during the COP28 this week? No, I don't. Both President Biden and Vice President Harris are not even attending. That is not to say that America is doing nothing. The president has allocated $6 billion to strengthen the electric grid, help deploy carbon-free energy, protect communities from the impacts of climate change, and improve water reliability. But given the dangers, the U.S. and other industrialized countries need to do more, a lot more.

 

Work on reducing emissions is so slow that additional greenhouse warming is almost a guarantee. The world's efforts to roll back climate change have been incremental when was is needed is a transformative approach. Redesigning the way buildings are built, rather than installing air conditioning, halting, rather than slowing, new development in floodplains, the kind and number of cars we drive, how we cool and heat our homes, and how business conducts business from the ground up.

 

Am I preaching to the choir? I don't think so. We are all sitting on our hands, complaining about the weather, the tick seasons, and the ice storms and doing little to nothing about the cause. Well, unless you plan to vacate this planet in the next seven or so years, our time of reckoning fast approaches. By then it will be too late.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

Baby Boomers are aging. As their health fails, an increasing number of the elderly are turning away from nursing homes and opting for home health care instead. The problem is finding enough trained caregivers to handle demand.

 

The demographics in the U.S. indicate two trends — an aging population as well as a declining birth rate. By 2034, there will be more adults over the age of 65 than children under the age of 18. Between 2018 and 2060, the population of seniors will double.

 

An overwhelming majority of Americans (88 percent) would rather receive long-term care services in their homes as they age, according to a recent study by the Associated Press and NORC Center for Public Affairs. Being cared for at home instead of in a clinical setting has many benefits according to studies. Daily routines in housekeeping, mealtimes, and things like prescription reminders seem to alleviate feelings of isolation and alleviate stress and depression while helping to improve memory and physical stability and fostering a sense of independence. And it is not just the elderly, individuals recovering from short-term surgery, rehab, or chronic illnesses prefer to recover at home as well.

 

About 12 million Americans are receiving some kind of home-care services at any given time and that number is increasing. There are 45 million seniors, based on Medicare statistics, of which 15 million will end up in the hospital every year. Of those, more than 3 million suffer from five or more chronic conditions and will be hospitalized several times a year. That is why home care is one of the fastest-growing segments of the health-care sector. 

 

The median costs of in-home care are different depending upon the state, but a survey by Genworth Financial believes the national average is approximately $4,000 per month. Private insurance companies, Medicare, and Medicaid foot some or most of that bill depending on the individual's circumstances.

 

The total home-care market was valued at $301.09 billion in 2021. It is expected to top $813.17 billion in the next five years. That is a compound annual growth rate of 15.25 percent. The U.S. Bureau of Labor Statistics indicates that the demand for home health care and personal care aides is expected to rise by 34 percent from 2019 to 2029, which would surpass the average growth rate of all other occupations. Last year, home care spending hit a historical high of $113.5 billion.

 

Unlike trends in other segments of health care that have seen high levels of corporate concentration, the home care industry is made up of more than 33,200 small businesses as of 2022. In total, there are an estimated 3.4 million home care workers providing health care support to older adults with disabilities in the U.S. Overall, roughly 78 percent of providers employ fewer than 50 workers. The facts are that there is a growing gap between the number of home care workers and patients. This is nothing new. Between 2013 and 2019, the number of available home care workers for every 100 patients has fallen by nearly 12 percent. The gap has widened since then. Some recent studies indicate that as many as 25 percent of referred patients have been turned away from home healthcare providers due to a lack of workers.

 

The physical, mental, and emotional stress required to care for these individuals is often overwhelming. It is not an easy job. More than half of these current home care workers have no formal education beyond a high school degree. Many are immigrants from various ethnic, economic, and cultural backgrounds.

 

Nationally, home health-care workers are paid an average of about $13.50 per hour. In some states such as Louisiana, West Virginia, Texas, Mississippi and Oklahoma, workers make less than $12 an hour. Almost 43 percent of workers' income is below the poverty level. In addition to the low pay, poor communication, lack of recognition and challenging work hours conspire to discourage workers from continuing in this field. In 2022, the professional caregiver turnover rate was more than 77 percent.

 

But before we pin the blame on unscrupulous home care agencies, recognize that these companies face enormous challenges in financial, operational, and clinical areas. Providing health-care services is extremely complicated, beset by logistical challenges, system inefficiencies, complex payment systems, and lack of care coordination. Private insurance companies, Medicare, Medicaid, differing reimbursement policies, eligibility, and all sorts of differing care requirements must be included in the mix.

 

It is an industry that is difficult to apply economies of scale because no two agencies address these problems in the same way. Usually, the owners as well as their employees, are overrun with existing duties, and as such expanding is just not worth considering. Paying higher wages might increase the supply of workers, but training them to understand, communicate, and deliver quality services to an expanding patient base is just as important.

 

If ever there was an industry in need of data-driven technology, it is this one. The industry could benefit greatly from communication tools, such as data access and secure data information exchange. If workers were able to access easy-to-use technology that could connect them to experts while on the job, both the stress levels and the probability of making medical mistakes would be lessened considerably. Software that could improve care delivery, while reducing paperwork, as technology has done in countless other areas, is just begging to be developed and introduced to an important area looking for solutions. 

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

The U.S. government has been borrowing from Peter to pay Paul for decades. That should come as no surprise to most, but the speed by which we are piling up debt to support our spending has become alarming.

 

The federal budget deficit is the difference between how much Washington spends and how much it receives in taxes. That concept should be familiar to all of us who count on our income to support our family's spending. Imagine if the amount you owed (your deficit) doubled from last year.

 

That is what happened to the nation's budget deficit over the last year, to the tune of $1.7 trillion.

 

If you look at the big picture, the U.S. total federal debt topped $33 trillion this year. That amounts to 121 percent of 2022's GDP. Usually, the U.S. deficit expands during hard times for the economy since tax receipts fall. The opposite occurs when the economy grows. However, that relationship has come apart.

 

The U.S. economy has been growing since the pandemic and yet tax receipts continue to fall. Much of the blame for this situation can be laid at the doorstep of various administrations and Congress. Tax cuts by George W. Bush, Barack Obama, and more recently Donald Trump have reduced the amount of taxes coming into the government's coffers.

 

In typical political fashion, the present White House under President Biden has pinned the blame for lower tax revenues on the former president. Trump indeed left the country in far worse shape than his predecessors. His more than generous corporate tax cuts failed to jump-start the economy. Instead of investing in capital formation, corporations used those savings to increase dividends and stock buybacks.

 

Federal spending now accounts for 25 percent of GDP. In defense of government spending, you might say the last few years have been unusual and you would be right. The COVID-19 pandemic triggered a huge spending program to save the economy and voters. In addition, the need to do something about the country's deteriorating infrastructure was finally addressed after years of inaction. Since then, Russia's invasion of Ukraine and the terrorist attack in Israel have added even more pressure to increase spending.

 

But the really big programs that have consumed so much of the government's spending commitments are Social Security and Medicare, which account for almost half of U.S. spending. As more Americans retire, the costs of these programs will continue to escalate. As such, deficits without tax increases are expected to climb.

 

Back in 2011, the Congressional Budget Office (CBO) predicted the fiscal deficit would average 1.8 percent of the economy in the ensuing decade. This past May, in the CBO's latest projections, that number has increased to 6.1 percent of Gross Domestic Product. Altogether, federal spending will account for almost 25 percent of the U.S. GDP over the next decade while tax receipts will account for 18 percent of GDP. If we continue this trend, Penn Wharton School researchers predict that the U.S. could default on its debt as soon as 20 years.

 

Up until now, the financial markets have largely ignored the deficit, and the endless debates and false promises by legislatures who talk a good game but simply move the deck chairs around on a sinking ship once they are in power. The bond market, however, is beginning to take notice.

 

As the nation's borrowing grows larger to finance a growing deficit, bond vigilantes are taking matters into their own hands. They are selling U.S. government bonds, which is pushing yields higher and higher on government debt. It is the private sector's response to Washington's profligate spending and irresponsible deficits. The result is that the credit markets are shifting long-term interest rates higher making it more and more expensive for Washington to continue spending and borrowing.

 

The government is now facing the reality of spending much more in interest payments on our ballooning debt than ever before. In the current fiscal year interest spending should surpass $800 billion, which is more than double 2021's $325 billion number.

 

By 2026 net interest expense should reach 3.3 percent of GDP. That would be the highest on record. If interest rates remain where they are, and fiscal policy continues its spending path. If unchecked, the cost of servicing this debt could be larger than defense spending by 2025, and top Medicare spending by 2026. 

 

I believe the present push by Republicans in Congress to cut spending is both necessary and urgent. It will be painful. It should also be accompanied by tax increases across the board, but that may be too much to ask for given elections next year, but one can always hope.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

Spending on candy, costumes, decorations, and parties is rising. The expected amount Americans plan to spend on Halloween is $12.2 billion in 2023, according to the National Retail Federation NRF). That beats last year's record of $10.6 billion.

 

More Americans than ever are celebrating with 79 percent of people participating, which is greater than last year and exceeds pre-pandemic levels as well. In addition, 76 percent of adult American pet owners plan to put their pets in costumes, according to a PetSmart national survey. The average amount consumers will pay to celebrate the holiday is $108.24 versus $102.74 last year.

 

Candy is still at the top of the agenda for households. They will spend $3.6 billion in rewarding trick-or-treaters at their doors. Those doors, as well as front steps, interiors, and yards, will be decorated with pumpkins, spider webs, skeletons, etc. Those decorations will total $3.9 billion, even more than consumers will spend on candy.

 

Halloween parties are also gaining increased popularity, especially among Gen Z and millennials. The three great elements of such parties are costumes, the food, and the decorations. While today's partygoers may believe they are forging a new trend in entertainment, Halloween parties are simply a blast from the past.

 

In the late 1800s, Halloween parties for both children and adults became the most common way to celebrate the holiday. Parties focused on games, foods of the season, and festive costumes. By the 1920s and 1930s, the holiday had become a community-centered event with parades and townwide Halloween parties as the featured event.

 

So, it's "back to the future" this year as more than 32 percent of American consumers plan to attend or throw a Halloween party. And like days of old, beyond your typical neighborhood get-together, there are long lists of Halloween parties (now listed on the internet) for just about every community in the nation.

 

However, it is costumes that have garnered the greatest spending — $4.1 billion, up from $3.6 billion last year. More consumers than ever (69 percent) are planning to buy costumes this year. Adult costumes saw an 18 percent increase, while children accounted for a 20 percent gain. Spider-Men, princesses, ghosts, witches, and other superheroes still account for the lion's share of children's preferences. This year aside from the traditional stable of vampires, witches and Batman, Barbie and Ken will be top picks for adults.

 

A growing new category for costume demand is pet costumes. The NRF believes consumers intend to spend as much as $700 million on costumes for their pets. Dogs seem to be the target of most owner's costume spending, according to another survey by Honest Paws.

 

The most popular costumes include a pumpkin, a hot dog, a bat, a bumblebee, a spider, and Chucky. Most owners planned to spend under $50 for Fido's disguise, but a third of dog owners admitted that they spent more money on their dog's costume than their own.

 

Another trend that seems to appeal to most costume buyers with pets is matching outfits for both owner and dog. Do not be surprised therefore to see a Batdog and Robin knocking on your door.  Almost 50 percent of owners plan to bring their dog along for trick-or-treating and more than one quarter will be competing in costume contests with their pet.

 

Just a side note on pet costumes. My canines, both past and present, would run for the hills at the drop of a costume hat. Most pets that show similar signs should never be forced to wear a costume. If you absolutely must dress your pet in something, make sure whatever costume you select allows your pet to be able to move and breathe easily. Clothing that resembles a traditional dog vest, or T-shirt that doesn't cover the entire body and head are the best. You may not win that neighborhood costume contest, but your pet will thank you for it, and Halloween for both of you will be far more memorable. 

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.

They are called general practitioners or primary-care doctors. Overworked, suffocating under mountains of paperwork, they see more than 30 patients a day in one of the most underpaid areas of the medical field.

 

An estimated one-third of all physicians in the U.S. are primary-care doctors, according to the Robert Graham Center, which studies the primary-care market. They include medicine physicians, general internists, and pediatricians. Depending on the definition, other researchers, like the Peterson-KFF Health System Tracker, say that number is far lower, around 12 percent. That compares with a range of 23-45 percent of primary care doctors in Europe.

 

My doctor, whose office is a stone-throw away from my house, fits the profile of most doctors in her field. She is meticulous, saved me from serious health issues several times, and knows my family intimately. I trust her implicitly and don't know what I would do without her.

 

Through the COVID-19 pandemic, her doors were always open, and she did it alone since finding anyone willing to work for her was impossible. With no help, she spent her evenings entering patient data into the nation's cumbersome electronic health record systems, scheduling appointments, and checking on patients.

 

Today, a smaller and smaller percentage of medical students are even considering the field. Salaries are a big reason why other medical and surgical specialties are promising far more income. Retirement is further depleting the nation's stock of GPs. At the same time, the demand for primary care is growing, thanks to record enrollment in Affordable Care Act programs. 

 

This results in longer and longer waiting times between visits to see your primary-care doctor. The average wait time is now about 21 days and growing. If, God forbid, your doctor retires, most people are faced with a "not taking new patients" electronic message from most physicians.

 

In response, over the last five years, large primary care and urgent care groups have sprung up across the nation. They are flourishing. Patients can usually walk in to see a doctor (although not necessarily the same doctor) on each visit. Many times, they will not even see a doctor. They will instead see a nurse practitioner or a physician's assistant.

 

Retail clinics like CVS Minute Clinics, offer in-person and virtual care seven days a week. Changes in Medicare and state laws have loosened the requirements for physicians and billing. This has boosted the growth in these areas, making them one of the fastest-growing segments of the medical arena.

 

The trend has grown so fast that roughly 46 percent of all primary-care physicians are currently working in practices they do not own. And two-thirds of those doctors do not work for another doctor, but a different entity altogether — Corporate America.

 

Given the present state of the primary-care field, why would the country's largest health-care insurers, drug store chains, and other billion-dollar corporations want to get involved in this business? Names like CVS, Amazon, Aetna, and Amazon are all buying up primary-care centers, doctor groups, and even the practices of individual doctors.

 

The simple answer — to create one-stop shopping for all your health-care needs. Corporations want access to the nation's huge number of consumers who need all sorts of health care and medical insurance. Primary-care doctors hold the pulse of millions and millions of patients. These patients will continue to generate a steady flow of business and profits to hospital systems, health insurers, and pharmacies.

 

In addition, Medicare, the federal health insurance program, is gradually being privatized. As it stands now, more than 30 million beneficiaries have policies with private insurers under the Medicare Advantage program. That is worth $400 billion a year for insurers and is growing every year.

 

Corporations entering the field say they are bringing coordinated health care to patients. Health insurers and others want to institute "value-based care" where the insurer and doctor are paid a flat fee for individual patient care. They argue that fixed payments will act as an incentive to maintain the health of the patient and provide access to early care, which in turn will reduce hospital stays and visits to expensive specialists.

 

Critics, however, worry that the economies of scale invading patient care will destroy the personal doctor-patient relationship. It may also end up in situations where corporate owners begin to dictate and limit services from the patient's first visit to extended hospital stays.

 

Given the growing scarcity of primary-care physicians, many millennial patients, especially those who are younger and generally healthy, are unfazed by the changes in health care. A video call or a no-wait visit at their local drug store or big-box store beats waiting for weeks to see a doctor. As for me, I am both lucky and grateful for my primary-care doctor.

 

Bill Schmick is the founding partner of Onota Partners, Inc., in the Berkshires. His forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners Inc. (OPI). None of his commentary is or should be considered investment advice. Direct your inquiries to Bill at 1-413-347-2401 or email him at bill@schmicksretiredinvestor.com.