Q&A: From the stock market to inflation and student loans

As I visit with clients worldwide, the questions are the same, so I thought I would address some of them for you. These are questions looming over the rest of this year, indeed, even into 2022.

What will inflation look like by the end of the year?

Inflation is on the horizon — or it’s already here, depending on who you listen to. Still, there are indications that the original inflation rate may not be as stark as originally expected. See this Forbes’ article with some approaching tell-tale dates.

Americans have already been hit with higher food prices, eating out, clothing, home improvement supplies and healthcare, not to mention cars, housing, airline tickets. The immediate impact is that cost of goods is rising while income is not.

Most likely outcome: The supply chain has been impacted to the point that demand will outrun supply for the foreseeable future. Experts believe that inflation will likely follow a similar path into 2022 at some levels.

What will Congress do about the student loan situation?

Your guess is as good as anyone. The current situation: Payments aren’t required, and interest won’t accrue on federal loans through September 30. Many in Congress want a $50,000 forgiveness, Biden is okay with a $10,000 forgiveness. However, since Congress wants to punt to President Biden and the president is non-committal, I wouldn’t hold my breath on any forgiveness of your student loan. Stalemate.

Most onlookers believe it will literally take an act of Congress to pass a student loan forgiveness, but there is too much division, and that isn’t the priority at the moment.

Most likely outcome: Biden extends the deferment another six months while competing parties debate the forgiveness matter.

Will the housing market continue to soar?

Analysts — and that includes some realtors and brokers — predicted the housing market would plummet by now. From personal experience, I can tell you they were wrong. The market has soared through the roof, but you and I both know this can’t continue forever. The question is: Will the market crash or show a major correction. Dave Ramsey’s team takes a stab at the question. 

Interest rates may continue to favor buyers or those refinancing for a while, though they may edge up by New Year’s Day.

Most likely outcome: The market will continue to sizzle into 2022. The crash or boom conversation also continues into next year.

What should you be doing about your finances?

We live in exciting yet uncertain times. Take care of the basics, ensure you put your four walls first and stay focused on the main thing. In other words:

  • Have a strong emergency fund. ($1,000-$1,500).
  • Pay down debt, especially things you can pay off completely.
  • Don’t gamble with the market. It’s not a time to try to predict. Stay the course.
  • Be careful about big purchases. Be shrewd and smart. Proverbs 15:22.
  • Review your insurance (home, auto, LTC, life).
  • Not a time to try to keep up with the Joneses. They’re broke anyway.

Most likely outcome: People — and government — will continue to spend unwisely. Nearly 80% of Americans live paycheck-to-paycheck, and nearly 70% couldn’t pay a $1,000 emergency today. That won’t change, but you can still win with your money since you don’t have to participate personally in the malarchy. 

What will unemployment and the labor force look like?

Staffing continues to be a challenge for many companies as the economy tries to sputter back to life this fall. In a still quite volatile market, surveys show that high numbers of workers are willing to relocate and hybrid jobs (working from home and office) are both on the rise.  In one of those surveys, 95% of business owners said it was challenging to find skilled workers.

Meanwhile, Kiplinger predicts employment will return to a level of normalcy this fall.

Through it all, you can learn to manage your personal economy better. If we can help, please schedule a free Financial Wellness Checkup.

Thanks for reading. Remember, you can read our regular blog entries here.

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