Billy E. from Lakeland, FL asks: Hi Mitch, if you had to cite one positive feature of the U.S. economy today, what would it be? I just don’t see much improving right now. Thanks for taking the time.
Mitch’s Response:
Thanks for your email! The positive factor that I would choose is also the most important one to the U.S. economy: consumers.
The Federal Reserve conducted a survey last fall, and in it, Americans reported the highest level of financial well-being in 10 years. Americans’ finances were boosted during the pandemic by fiscal stimulus programs, in the form of direct payments and also from PPP business loans and expanded unemployment benefits. We know that many households used this money to pay down debt and buffer savings accounts.1
4 Steps to Prepare for Retirement Amid Market Downturn
The market is currently very volatile, and investors, especially those who are building a retirement nest are questioning what to do with their assets.
When the headlines focus on ‘worrisome stories’, it’s easy to get caught up in short-term decision marking. Instead of falling into this trap, here are some important factors that investors should consider before retirement:
- Determining your expenses
- Determining your income
- Matching your income source with your goals and time frame
Considering these factors can be a daunting task, but there are four simple steps that can help you plan for retirement! If you have $500,000 or more to invest, get the scoop on these simple steps with our guide. Click on the link below to get your copy today:
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The end result is that American household debt payments as a percentage of disposable income are at a 40+ year low, which puts Americans in a strong position to weather an economic slowdown or even a recession:
The effect of fiscal stimulus has largely faded, but now Americans are being boosted by a strong jobs market with rising wages. Overall, many American households are in a stronger financial position now than they have been in decades.
Now, to be fair, the Fed’s survey was taken several months ago, before the Omicron variant dented growth and before higher inflation and particularly rising food and gas prices rattled consumers. Rising wages help to offset the effects of inflation, but at the moment prices are rising faster than wages, so consumers are feeling it. But the effect has not been so big that consumers are all of a sudden financially vulnerable. JP Morgan Chase reported last week that they expect credit losses to remain uncharacteristically low through 2023, and they are reporting strong cash balances among bank customers. It is also true that the labor market is one of the tightest we’ve seen, ever.
Lingering inflation can hurt consumer sentiment and could eventually cause consumers to retrench from purchases – this will be a factor to watch in the second half of the year. But for now, I think American household finances are a big positive today that may be underappreciated, and that could also carry this economic expansion forward despite the challenges.
During this time of rising inflation and increased volatility, I would recommend that investors (especially those nearing retirement) go through four steps that are outlined in our exclusive guide, “4 Steps to Managing Your Retirement Assets4.”
This guide can help give you some ideas for how to transition into retirement with confidence even when worries are high.
If you have $500,000 or more to invest, click on the link below to get your copy of “4 Steps to Managing Your Retirement Assets.”
Disclosure
2 ZIM may amend or rescind the “4 Steps to Managing Your Retirement Assets” guide for any reason and at ZIM’s discretion.
3 Fred Economic Data. April 4, 2022. https://fred.stlouisfed.org/series/TDSP
4 ZIM may amend or rescind the “4 Steps to Managing Your Retirement Assets” guide for any reason and at ZIM’s discretion.
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