Weekly Inspiration – “Inflation is the cragbrass in your savings.” -Robert Orben-
A focus on the news of the day is not a focus on the fundamentals…but it’s growing increasingly difficult to avoid today’s inflationary news. It’s everywhere you turn, and it is impacting nearly every aspect of daily life. It can be difficult to avoid focusing on that which you cannot ignore.
But oddly enough there may be a silver lining for advisors in today’s news. According to the BMO Harris Real Financial Progress Index (a quarterly survey of consumers on financial topics commissioned by BMO Harris Bank), 80% of Americans plan to change their actions relative to inflation and the cost of goods. For example, 42% of those surveyed are changing how they shop for groceries and 23% indicate they will spend less on vacations.
Further, 60% of Americans said that inflation had adversely impacted their personal finances with 21% taking the step to reduce their retirement savings. So where is the good news?
According to the survey, Americans increasingly value the power of a written financial plan. 37% of those surveyed say that they have a written plan and 52% said that their financial company advisor was important to that process.
Overall, the survey showed an increase (quarter over quarter) in financial confidence levels for Americans. The survey attributes this to more Americans taking control of their personal finances, having a written plan, and checking in more often with their financial advisor. In the face of a significant headwind, Americans are seeking advice and counsel.
Driving a little less and looking more intently for bargains is one thing…making retirement plan savings decisions without counsel is another. Now might be a good time to review those plans you have in place, and to encourage those without a written plan to sit down with you to craft one.
In a holiday-shortened week of volatile trading, stocks surrendered some of the previous week’s strong gains.
The Dow Jones Industrial Average fell 0.94%, while the Standard & Poor’s 500 declined 1.20%. The Nasdaq Composite index lost 0.98% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.17%.1,2,3
An Uncertain Market
Stocks experienced wild swings last week, in part, due to ongoing uncertainty over economic health and the path of inflation. Investors seemed conflicted when interpreting the data, in some instances viewing economic strength as a negative since it may mean more aggressive rate hikes from the Fed.
Illustrative of how this uncertainty has played out, stocks surged higher on Thursday despite comments from Fed Vice Chair Lael Brainard indicating it’s unlikely that the Fed will pause on rate hikes. Then on Friday, stocks dropped as a better-than-expected jobs report raised concerns about monetary policy.
Strong Job Growth
The U.S. economy added 390,000 jobs in May, a slowdown from recent months but higher than consensus estimates. Job gains registered in several categories, led by leisure and hospitality, professional and business services, and warehousing and transportation. The retail sector lost jobs.4
The unemployment rate remained unchanged at 3.6%. Wage growth cooled off, with a 12-month increase of 5.2%, down from April’s year-over-year jump of 5.5%. Finally, the labor participation rate ticked higher again, reflecting how job availability is helping to pull Americans off the labor-market sidelines.5
This Week: Key Economic Data
Thursday: Jobless Claims.
Friday: Consumer Price Index (CPI). Consumer Sentiment.
Source: Econoday, June 3, 2022
This Week: Companies Reporting Earnings
Monday: Coupa Software, Inc. (COUP).
Wednesday: Campbell Soup Company (CPB).
Thursday: DocuSign (DOCU).
Source: Zacks, June 3, 2022
Footnotes and Sources
2. The Wall Street Journal, June 3, 2022
3. The Wall Street Journal, June 3, 2022
4. CNBC, June 3, 2022
5. CNBC, June 3, 2022
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