It has been an interesting week in the financial realm, with mixed stocks throughout the week. Luckily, we did not experience any significant stock slides this week, as banking woes have begun to ease following the collapse of Silicon Valley and Signature Bank. While we may have passed the shock of overnight failures, many banks, especially small ones, must work hard to ensure they remain on a solid footing. Additionally, the White House has called for stricter regulation on banks to prevent a repeat of a few weeks ago. Future changes will likely have a minimal impact on the average person, but the drama highlights the importance of protecting your money under the Federal Deposit Insurance Corporation (FDIC). The FDIC ensures an individual’s money up to $250,000 per person, per account. Therefore, depositing your funds only in banks insured by the FDIC is essential.
Economy
On Friday, the Commerce Department released data showing that consumer prices rose 0.3% last month compared to 0.6% from the previous month. This is good news as it pertains to inflation and could likely mean that the Federal Reserve’s aggressive actions are having an effect. Obviously, we still have a long way to go, but it is a step in the right direction. Investors reacted positively to the news, and we saw the Dow Jones close up 415 points on Friday, and we ended the quarter overall up.
Additionally, as we put the recent banking fiasco behind us, individuals can begin to gain confidence in the economy. Consumer confidence is a vital component of a healthy economy. When consumers feel confident about the economy, they are more likely to spend money on goods and services, which, in turn, drives economic growth. High consumer confidence levels can increase consumer spending, boost businesses’ sales and profits, create jobs, and encourage investment in new projects.
Layoffs
The past few months have been plagued with news of numerous companies, especially tech companies, conducting significant layoffs. The past week has been no different, as Accenture announced it was laying off 19,000 employees. The company has experienced a considerable growth period coming out of the pandemic. While the company has experienced positive growth lately, these layoffs are undoubtedly an effort to cut costs and streamline the company. Additionally, Footlocker announced it was closing 400 stores. The company is focusing on closing mall-based stores to transition the brand. In doing so, the company plans to open roughly 300 free-standing stores through a rebranding campaign.
While layoffs are never good news, they are especially significant during periods of high inflation. Inflation, which is the persistent increase in prices of goods and services, can reduce the purchasing power of consumers, leading to reduced demand, which many people have been seeing over the past six months. Job layoffs can exacerbate the problem by reducing the income of affected individuals, thereby further reducing their purchasing power. This can lead to a vicious cycle of reduced demand, lower sales, and job cuts. Moreover, layoffs can decrease consumer confidence, as those who still have jobs may become worried about their job security. This, in turn, can further reduce demand and exacerbate the inflation problem. If not corrected, layoffs during high inflation can have long-lasting adverse effects on individuals and the economy.
Food Prices
The US has experienced an array of different climate disasters over the past six months, ranging from floods to droughts, and farmers are starting to raise the red flag. These recent disasters have damaged crops, reduced yields, and led to crop failures, which can ultimately result in a shortage of food supply. Additionally, extreme weather events can disrupt the transportation and distribution of food, causing shortages and increasing the cost of food. As a result, food prices can spike, making it difficult for low-income families to access sufficient food. The recent spike in egg prices is a similar example, as farmers claimed they fell victim to the Avian Flu. While there isn’t much that the individual consumer can do, it’s best to be prepared for some increased prices that could happen in the near future.
Tax Day
With only 17 days left until Tax Day, ensuring compliance with the latest changes and taking advantage of the newest tax deductions is crucial. Filing the most accurate return can likely avoid any penalties and potential legal issues. If you expect to owe money this year, set some funds aside to not cause an enormous shock to your savings and budget. Moreover, tax filing is a great time to increase your financial organization, allowing you to assess your financial goals.