In today’s Steady Investor, we look at key factors that we believe are currently impacting the market, such as:
Consumer Spending Shines in January – Consumer spending accounts for more than two-thirds of US economic output. When consumer spending is strong, it follows that the economy is usually strong or strengthening, too. January brought good news – consumer spending at stores, online, and at restaurants (food services) jumped 5.3% from December, putting spending back at highs. Interestingly, Americans hunkered down over the holidays, particularly as election uncertainty and surging pandemic cases weighed on sentiment. Spending during the holiday season actually fell from previous periods. To be fair, a significant catalyst for higher spending in January was government stimulus checks which went out to most American families. Where previously most direct government payments went into savings, this time consumers dished out cash for spending. Meanwhile, other economic data points to solid footing for the US economy in the new year – the Federal Reserve reported that industrial production rose for the 4th straight month, and manufacturing also pushed back-up to pre-pandemic levels. All good signs of things to come, in our view.1
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See How You Can Prepare for Market Uncertainties
As investors are thinking about their next financial move, questions may rise – how much potential does 2021 have to be an outstanding year for the market? When will the economic recovery take place?
Navigating through 2020 showed us all that any outcome is possible in the market, and that’s why it’s important to be ready! This year has potential to be a huge year for the market, but how can you better prepare for both the good and the bad this year? In this report, we make predictions for the sector under and over performers, while also providing thoughts on possible outcomes of 2021. We will look at:
If you have $500,000 or more to invest and want to learn more, download your guide today!
Download Our Just Released, “February Market Strategy Guide”2
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Watching the Federal Debt Ceiling (Again) – Many readers remember Congressional infighting over the federal debt ceiling over the last several years, with debates about raising it to allow for the U.S. to borrow more. Those debates could be coming back. In the $1.9 trillion “American Rescue Plan,” Democrats declined to include an increase in the federal debt ceiling, meaning the issue will have to be addressed later this year. ‘Kicking the can down the road’ could mean one of two things: either the debt must be increased later this year in another tax-and-spending package, or Republicans and Democrats will have to negotiate it into another bill along the way. Either way, expect to hear another batch of debt ceiling debates in the late summer or early fall, when the US could run out of borrowing capacity.3
Labor Market Setbacks – Initial jobless claims for unemployment benefits rose to 861,000 last week, delivering a setback to the jobs market even as the broad economy shows signs of improving. The pre-pandemic peak for jobless claims is 695,000, which is the de facto benchmark for indicating the jobs market is functioning again as normal.4 The labor market does not appear to be fully stalled, but it does appear as though it has lost some momentum.
Is There a Major Boost Coming for Child Tax Credits? American families with young children may be getting a major tax boost in the coming years. Both President Biden and Senator Mitt Romney have proposed versions of expanding child tax credits, in fairly bold ways. President Biden’s proposal would lift the child tax credit to $3,600 for a child under 6 and $3,000 for children between the ages of 6 and 17. The boost to the tax credit (amount above $2,000) would start phasing down for individuals earning $75,000 per year and couples earning $150,000, with the remainder phasing out for individuals earning $200,000 and couples earning $400,000. Romney’s plan would raise the credit for children under 6 to $4,200, while matching the $3,000 credit for older children. Romney’s plan also phases out the full tax credit for at incomes higher than $200,000 (single) and $400,000 (joint). Both Biden and Romney share the same goal: to reduce child poverty in the United States, which is sadly higher than most developed countries.5
Managing Expectations of 2021 – 2020 taught us that anything can occur in the market at any time. With that being said, it’s better to prepare for any outcome! With 2021 potentially being a great year for the market, let us help you manage your expectations by focusing on key data points and facts!
In our just-released February Market Strategy Report, we make predictions for sector under and over performers, while also providing thoughts on possible outcomes of 2021. We will look at:
If you have $500,000 or more to invest and want to learn more, click on the link below to get your free report today!
Disclosure