{"id":13404,"date":"2024-09-23T21:23:37","date_gmt":"2024-09-23T21:23:37","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13404"},"modified":"2024-09-25T16:02:35","modified_gmt":"2024-09-25T16:02:35","slug":"fed-cuts-rates-us-household-incomes-rise-consumers-more-optimistic","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/fed-cuts-rates-us-household-incomes-rise-consumers-more-optimistic\/","title":{"rendered":"Fed Cuts Rates, US Household Incomes Rise, Consumers More Optimistic"},"content":{"rendered":"\n<p>In this week\u2019s issue of the Steady Investor, we take a closer look at key events influencing the market, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Fed cuts rates by half a percentage point<\/li>\n\n\n\n<li>The rise in U.S. incomes<\/li>\n\n\n\n<li>Consumer sentiment rises<\/li>\n<\/ul>\n\n\n\n<p><strong>The Long-Awaited Rate Cut Finally Arrives \u2013 <\/strong>The Federal Reserve wrapped up its two-day policy meeting this week, confirming that the monetary policy pivot is officially underway. Leading up to the meeting, the chatter was all about whether the rate cut would be 25 or 50 basis points, and the Fed opted for the more dovish approach, lowering the benchmark fed funds rate by 50 basis points to a range of 4.75% and 5%. 11 of the 12 Fed officials voted in favor of the cut, and projections released after the meeting signaled that the Fed could cut by 25 additional basis points at the next two meetings, scheduled for November and December. Doing so would push the fed funds rate down to a range of 4.25% to 4.5% by the end of the year. As Mitch Zacks has written recently, what we think is more important is the overall direction of rates, not necessarily the magnitude of each Fed decision. As far as stocks are concerned, we do not see monetary policy as a critically influential factor in determining the direction of markets. Stocks have risen during periods of rising rates (see 2023 as a prime example), and they\u2019ve also performed well during periods of easy monetary policy. There are too many other factors\u2014namely earnings\u2014influencing stock prices for one Fed decision to make or break the markets. We remain bullish for other key reasons: expected earnings growth in the next year and lower inflation and rates in the future than we have today.<sup>1<\/sup><\/p>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/arrow-bull-bear-guide?source=zim&amp;medium=email&amp;term=bimonthly_bear_bull_guide_zim_09_15_2020&amp;content=bear_bull_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/arrow-bull-bear-guide?source=zim&amp;medium=email&amp;term=bimonthly_bear_bull_guide_zim_09_15_2020&amp;content=bear_bull_guide\">Unsure How to Make Your Retirement Last in Today\u2019s Market?<\/a><\/u><\/strong><\/p>\n\n\n\n<p>Retirement is about enjoying the lifestyle you\u2019ve envisioned, however, achieving that requires tapping into the savings you&#8217;ve diligently built over the years.<\/p>\n\n\n\n<p>If you want to ensure your money will last, it&#8217;s essential to understand some strategies and best practices. Our free guide, <strong><em><u><a href=\"https:\/\/go.steadyinvestor.com\/arrow-bull-bear-guide?source=zim&amp;medium=email&amp;term=bimonthly_bear_bull_guide_zim_09_15_2020&amp;content=bear_bull_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/arrow-bull-bear-guide?source=zim&amp;medium=email&amp;term=bimonthly_bear_bull_guide_zim_09_15_2020&amp;content=bear_bull_guide\">4 Strategies for Spending Money in Retirement<sup>2<\/sup><\/a><\/u><\/em><\/strong> offers some guidelines to help ensure your retirement nest egg lasts as long as possible. You\u2019ll also get insight on:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Spending 101: Understanding Tax Buckets<\/li>\n\n\n\n<li>The 4% Rule<\/li>\n\n\n\n<li>Dynamic Spending with the 5% Rule<\/li>\n\n\n\n<li>And more\u2026<\/li>\n<\/ul>\n\n\n\n<p><br>If you have $500,000 or more to invest, download our guide <em>4 Strategies for Spending Money in Retirement<\/em>.<sup>2<\/sup>\u00a0Simply click on the link below to get your copy today!<br>\u00a0<br><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/arrow-bull-bear-guide?source=zim&amp;medium=email&amp;term=bimonthly_bear_bull_guide_zim_09_15_2020&amp;content=bear_bull_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/arrow-bull-bear-guide?source=zim&amp;medium=email&amp;term=bimonthly_bear_bull_guide_zim_09_15_2020&amp;content=bear_bull_guide\">Download Zacks Guide, <em>4 Strategies for Spending Money in Retirement<sup>2<\/sup><\/em><\/a><\/u><\/strong><\/p>\n\n\n\n<p><strong>One Reason Consumer Spending Has Held Up: Incomes are Rising \u2013 <\/strong>The strong jobs market has been a saving grace for U.S. consumers grappling with higher prices. And in a first since the pandemic, household incomes have also benefitted as a result. According to Census Bureau data, inflation-adjusted median household income reached $80,610 in 2023, which was 4% higher than 2022 levels, and finally moved household income back to where it was in 2019. As seen in the chart below, median household income began a strong acceleration in 2014, which carried to 2019 and was of course dented by high unemployment in 2020. As the labor market added jobs at a steady clip over the past few years, the median income level reversed its descent and now appears poised to continue tracking higher\u2014assuming labor market strength continues. Digging into the data a bit deeper.<sup>3<\/sup><\/p>\n\n\n\n<p><strong><em>Real Median Household Income in the U.S.<\/em><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"349\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/09\/pic1-1-1024x349.png\" alt=\"\" class=\"wp-image-13405\" srcset=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/09\/pic1-1-1024x349.png 1024w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/09\/pic1-1-300x102.png 300w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/09\/pic1-1-768x262.png 768w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/09\/pic1-1.png 1320w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\"><strong><em>Source: Federal Reserve Bank of St. Louis<sup>4<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n<p><strong>Consumers Turn More Optimistic \u2013 <\/strong>A preliminary reading from the University of Michigan\u2019s consumer sentiment index was released this week. Americans appear to be getting more optimistic. The sentiment index registered at 69 in September, which was up from August\u2019s 67.9 reading. The University of Michigan also indicated that respondents were more optimistic in their outlook than they were earlier in the year, with falling inflation expectations over the next year. One area where respondents seemed a bit more concerned regarded the labor market, which is perhaps a reflection of headlines in the financial media\u2014and comments by the Federal Reserve\u2014citing a weakening jobs market as the impetus for rate cuts. Improved sentiment was supported by a Deloitte analysis predicting that holiday shopping sales will increase between 2.3% and 3.3% in 2024, signaling consumers&#8217; continued willingness to spend.<\/p>\n\n\n\n<p><strong>Strategies for Spending Money in Retirement \u2013 <\/strong>After years of hard work and careful planning, you\u2019ve built up your retirement nest egg \u2013 but how should you start spending it?<\/p>\n\n\n\n<p>Retirement spending strategies vary widely, with some being more straightforward than others. In our exclusive guide, <strong><em><u><a href=\"https:\/\/go.steadyinvestor.com\/arrow-bull-bear-guide?source=zim&amp;medium=email&amp;term=bimonthly_bear_bull_guide_zim_09_15_2020&amp;content=bear_bull_guide\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/arrow-bull-bear-guide?source=zim&amp;medium=email&amp;term=bimonthly_bear_bull_guide_zim_09_15_2020&amp;content=bear_bull_guide\">4 Strategies for Spending Money in Retirement<sup>6<\/sup><\/a><\/u><\/em><\/strong>, we break down key approaches and practical tips that can help investors create a sustainable spending plan. Inside, you\u2019ll discover:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Spending 101: Understanding Tax Buckets<\/li>\n\n\n\n<li>The 4% Rule<\/li>\n\n\n\n<li>Dynamic Spending with the 5% Rule<\/li>\n\n\n\n<li>And more\u2026<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and are ready to learn more, click on the link below to get your copy today!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Federal Reserve lowers rates by 50 basis points, inflation-adjusted median household income rose 4% in 2023, latest sentiment index shows consumer optimism improving.<\/p>\n","protected":false},"author":3,"featured_media":13409,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-13404","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\/13404","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=13404"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13404\/revisions"}],"predecessor-version":[{"id":13406,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13404\/revisions\/13406"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media\/13409"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13404"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13404"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13404"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}