I hope everyone is enjoying the July 4th weekend this year as millions of people hit the road and skies for vacation. The national average for gas is around $4.80, which is down roughly $0.20 from a few weeks ago but is near $2 more than just a year ago. While we’re seeing a slight reprieve at the pumps, it appears high gas prices will remain for at least the near term. Moreover, statements from the White House and the current administration signal that there will likely not be much executive action taken to reduce the high costs that the everyday family is experiencing.
Last month we saw the Federal Reserve increase interest rates to combat the record-high inflation and rising costs, and they will meet again at the end of July. There is already talk that we can expect at least another .50% hike in interest rates. This is a strong sign that the inflation worries remain dominant, and the country could be facing another recession. Recession talks continue to be mixed, with some analysts suggesting it’s inevitable and others stating it may be short and not dramatic. Either way, we can expect continuing high prices. Inflation is causing families to pay more for everyday products and can easily be seen in your grocery bill. We still suffer from product shortages, and the prices of specific products such as beef are through the roof. Furthermore, if you were considering purchasing a home or a car, you can expect to pay higher now that rates have increased and probably even more by the end of the summer if trends continue.
Signs of the economy slowing down are seen in the housing market as homes stay on the market longer and with less competitive offers. This is related to the much higher interest rates, with a current national average of 5.83% for a 30-year fixed rate. This higher interest rate is causing some potential home buyers to not enter the market, especially first-time home buyers. Additionally, home sales have decreased over the past few months, highlighting the market’s slowing. As I mentioned in previous posts, housing inventory still remains relatively low, which will keep housing prices elevated. As we move through summer, you can expect inventories to increase, and the market should begin to cool off by fall. I expect next year’s housing market to look slightly different compared to the last 18 months we have experienced. Remember, though, that it will take some time for inventory to catch up with demand, but we’re starting to see early signs of this happening.
The stock market continues to be volatile and difficult to predict. Stocks did end higher on Friday, with the Dow Jones closing up over 300 points. Additionally, we’re experiencing some larger companies conducting stock splits, including Amazon, Tesla, and Google. These splits can provide opportunities for small investors, but remember, these are not sales or a discount. Stock splits do not change the value of the company. As we continue to see large swings in the market, don’t be tempted to time the market, as it’s nearly impossible. Continue to invest in your IRA and 401Ks. Be disciplined in your investing and maintain your retirement plan. As the markets stabilize, that will be the time to analyze your portfolio and conduct any reallocation as necessary.
Enjoy your time with the family on the 4th of July!