A strong labor market with wages on the rise. Good for paychecks, not so good for the macroeconomy – at least, that’s what the Fed sees.
This persistent inflation has the Fed on its front foot when it comes to interest rate hikes. It’s expected that the Federal Reserve will add half-a-percent to its base rate. Almost, but not quite, even money has a quarter-point hike in the immediate future.
Right now, the base rate is 4.75 percent. Earlier predictions that 5.5 percent is likely seem to be spot on IMHO. (Some bank analysts think a flat 6 percent is in the cards, but let’s jump off that cliff when we get to it.)
Bottom line: this economy is not only confusing, but it also calls for a new normal. The new, normal atmosphere likely entails higher interest rates, higher-than-usual inflation for a longer stretch (18 months?) and positive numbers for workers, including job-seekers.
For 401k considerations, keep those eyes on the prize and stay the course. Those retirement funds are long-term investments and there’s no present reason to jump ship. Not yet.
SOCAL RATE HIKES
The inclement weather (read: disaster areas) brought with it a surge in demand for natural gas. That’s one thing. Another thing is that SoCal Gas and SDG&E are asking for regular rate hike irrespective of anomalous, wet winters.
The first public hearing on these hikes is March 6 (link here), while the second is March 15,
The spike in recent gas rates, especially for small businesses, has spurred the utilities to create a fund to help owners pay their bills with assistance programs (link here).
TAX SEASON: PART DEUX
If you live in an area hit with any of a number of winter storms, your individual tax-filing deadline has moved to Oct. 16, 2023. Click here to get more information, or to contact the IRS to let them know you (or your tax preparer) need to pull together documentation/receipts from areas that were impacted - even if your home address was not.
As for tax returns this year, expect a little less in that refund check. The culprit? Yep: persistent inflation. With 75 percent of Americans counting on a tax refund to help them balance the household budget, this year is going to be tight.
Here are some other results from an extensive tax-return survey from BankRate.com:
- Plan for a lesser tax return this year – inflation is going to eat some of it before you see it
- Majority Worried About Tax Refunds This Year: Nearly 7 in 10 (69%) Americans who expect to receive a tax refund this year have at least one worry about their refund, led by concerns their refund won’t make as big of an impact due to inflation/rising costs (34%) or will be smaller than usual (33%). Other fears include refunds being delayed (19%) and not stretching as far due to higher interest rates (19%)
- More are Relying on Refunds: 75% who expect to receive a federal tax refund in 2023 say the money is important to their overall financial situation, up from 67% last year. This year, that includes 43% who say their tax refund is very important to their financial situation.
- Plans For Refund Money: Of those expecting a refund, the most popular plans for the money are to pay down debt (28%), boost savings (26%) or use most or all of the money to pay for day-to-day expenses (13%).
STUDENT LOAN FORGIVENESS vs SUPCO
Not much here except to anticipate paying back those monthly installments if you have a student loan. It could work out differently, but better to be prepared, amiright??
Check out the show below!