{"id":10146,"date":"2022-02-07T19:01:56","date_gmt":"2022-02-07T19:01:56","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=10146"},"modified":"2022-02-26T13:05:36","modified_gmt":"2022-02-26T13:05:36","slug":"inflation-and-wages-rise-q4-gdp-spikes-services-spending-poised-to-grow","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/inflation-and-wages-rise-q4-gdp-spikes-services-spending-poised-to-grow\/","title":{"rendered":"Inflation and Wages Rise, Q4 GDP Spikes, Services Spending Poised to Grow"},"content":{"rendered":"\n<p>In today\u2019s Steady\nInvestor, we dive into key market factors that we believe investors should keep\nan eye on for the future, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Wages\nand inflation on the rise<\/li><li>U.S. GDP\ngrowth boom in Q4 2021<\/li><li>Consumer\nspending<\/li><\/ul>\n\n\n\n<p><strong>Wages Up, Inflation\nUp \u2013 <\/strong>It is common knowledge by now that inflation in the U.S. \u2013 and also\naround the developed world \u2013 has been rising at a faster-than-expected pace.\nAccording to the Bureau of Labor Statistics, the Consumer Price Index for all urban\nconsumers rose 0.5% in December (seasonally adjusted), putting its full-year\nincrease at 7% and marking its fastest increase in over 20 years. It\u2019s not all\nbad news though \u2013 wages are also on the rise, and higher incomes can serve to\nneutralize the effect of higher prices for goods and services. According to the\nLabor Department, the U.S. employment-cost index, which measures wages and\nbenefits paid by employees, jumped 4% in Q4 2021 from a year earlier \u2013 which\nalso marked the fastest rate of growth in 20+ years. The offset is not perfect, and not everyone received wage or\nsalary increases last year. But as you can see in the chart below, wage\nincreases have been stubbornly low in the previous decade, so the sharp\nincrease over the last year was a welcomed development for workers.<sup>1<\/sup><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/pic1-1024x395.png\" alt=\"\" class=\"wp-image-10147\"\/><figcaption> <strong><em>Source: Federal Reserve Bank of St. Louis<sup>2<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2022_02_06&amp;content=retirement_strategy_guide\">Protect Your Retirement Against Life\u2019s Unknowns!<\/a><\/strong><\/p>\n\n\n\n<p>Are you worried about volatility and inflation and it&#8217;s impact on your retirement assets? How can you protect them against these market unknowns? <\/p>\n\n\n\n<p>In times like these, it is important to have a strategy in place to account for the market\u2019s ups and downs. Our free guide, <em>How Solid Is Your Retirement Strategy? <\/em>can help you build a retirement strategy that takes the \u201cwhat ifs\u201d into account.<\/p>\n\n\n\n<p>This guide offers\nour views on some key retirement investment strategies that may help you\npreserve your financial security in retirement, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The\nimportance of flexible portfolio allocation<\/li><li>Why\nkeeping some liquid assets can potentially help you preserve more wealth<\/li><li>Understanding\nyour risk tolerance in case of a market downturn<\/li><li>Plus,\nmore strategies to help you protect your retirement assets <\/li><\/ul>\n\n\n\n<p>If you have $500,000\nor more to invest, get our free guide by clicking on the link below. <\/p>\n\n\n\n<p><strong>Get our FREE guide: <a href=\"https:\/\/go.steadyinvestor.com\/download-retirement-strategy-guide?source=zim&amp;medium=blog&amp;term=steadyinvestor_zim_2022_02_06&amp;content=retirement_strategy_guide\">How Solid Is Your Retirement Strategy?<\/a><\/strong><sup>3<\/sup><\/p>\n\n\n\n<p><strong>U.S. GDP Growth Booms\nin Q4 2021 \u2013 <\/strong>The Omicron surge had many market watchers worried. Would the\neconomic effect be similar to what we saw with Delta, which dealt a brisk\nheadwind to spending and growth and ultimately anchored GDP for the quarter?\nThe answer, it seems, was no. The U.S. economy posted very strong growth in Q4\n2021, surging at a 6.9% annual rate. All told, 2021 was the strongest year of\neconomic growth in the U.S. in almost 40 years, with output growing 5.5%. The\nquarter-over-quarter growth rate from Q3 2021 to Q4 2021 was also a meaningful\n2.3%, adjusted for inflation, which underscores the light impact felt by the\nOmicron wave. According to the Commerce Department, households posted solid\nspending numbers in Q4, but the real juice behind the GDP growth surge came\nfrom businesses replenishing inventories. Without the inventory restock, GDP\nwould have grown at a much softer 1.9% in Q4. Such a lower growth rate would\nhave put the U.S. more in line with Europe, which has been lagging in its\nrecovery. GDP growth for the 19-country eurozone rose just 1.7% in Q4, and\nGermany\u2019s economy contracted slightly.<sup>4<\/sup><\/p>\n\n\n\n<p><strong>Is Consumer Spending Poised\nto Shift from Goods to Services? <\/strong>One of the key drivers of inflation over the last year was\nthe stark U.S. consumer shift from services to goods. With the pandemic\u2019s\nimpact on consumers\u2019 desire to travel, go out, etc., many opted to spend more\non goods like home furnishings and computers. The result was a very robust\ndemand for goods bumping up against snarled supply chains that simply could not\nkeep up. Prices for goods like furniture and appliances soared 10.7% from a\nyear earlier, while the costs of services like airfares went up a lesser 3.7%.\nAs demand outstripped supply, prices went up. The trend may be reversing \u2013 as\nthe Omicron wave looks to be retreating as the spring season approaches,\nconsumers appear to be stepping out again. As readers can see in the chart\nbelow, spending on goods and services have been steadily converging over the\npast few months.<sup>5<\/sup><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/pic2-1024x420.png\" alt=\"\" class=\"wp-image-10148\"\/><figcaption> <strong><em>Source: Federal Reserve Bank of St. Louis<sup>6<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n<p><strong>Protect Your Retirement Assets<\/strong> \u2013 Instead of trying to\npredict where the market is headed, we recommend that investors, especially\nthose planning for retirement, prepare for its unknowns. This will involve finding\na retirement strategy that takes the \u201cwhat ifs\u201d into account. Our free guide\ncan help you to prepare for what\u2019s to come as you plan your retirement!<\/p>\n\n\n\n<p>If you have $500,000 or more to invest, get our free guide, <em>How\nSolid Is Your Retirement Strategy.<sup>7<\/sup><\/em> You\u2019ll get valuable and\npractical ideas to help build a \u201cweatherproof\u201d retirement strategy that can\npotentially protect your retirement nest egg from any storm that could threaten\nyour financial security.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Wage hikes help blunt inflation, 2021 GDP strongest in almost 40 years, pandemic end may mean more consumer spend on services <\/p>\n","protected":false},"author":3,"featured_media":7426,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-10146","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10146","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=10146"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10146\/revisions"}],"predecessor-version":[{"id":10206,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10146\/revisions\/10206"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=10146"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=10146"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=10146"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}