Since we don’t have a crystal ball, it is impossible to accurately predict the future! This is especially true when it comes to economic matters, including investments, real estate, interest rates, inflationary pressures, government actions, international factors, etc. What are the ramifications of inflation, recession, interest rates, Federal Reserve Bank decisions, etc.? How can you hedge your bet to minimize unnecessary risk while receiving a quality return? There is no simple answer, because many factors have significant influences. With that in mind, this article will attempt to consider, examine, and briefly review the potential factors, to help readers gain a more complete understanding of the possibilities.
1) Interest Rates: We have experienced an extended period of historically low interest rates. This has created easy money, because the cost of borrowing is so low. Both individuals and corporations have benefited, at least in the short term, by allowing homebuyers to buy more homes because their monthly charges are low due to low mortgage rates. Corporate and government bonds, and banks, have paid low yields. It has curbed inflation and created a rise in home prices that we haven’t seen in recent times. The Federal Reserve Bank has signaled that it will end this support and will also raise rates, probably three times, in 2022. What do you think will cause that?
2) Auto Loans, Consumer Loans, Loans – The auto industry has been significantly affected by supply chain challenges. When rates go up, car loans and leases will become more expensive.
3) This pattern began after the Tax Reform Law, approved at the end of 2017, which created the new initial deficits of trillions of dollars.
4) Government spending, caused by financial suffering and challenges, due to closures, etc., due to the pandemic, created trillions more in debt. Unfortunately, debt must be addressed eventually.
5) Perception and attitude: Apparently, the last two years created a public perception, as well as many fears, with a crippling economic impact.
Or we start planning, effectively, and with common sense and an open mind, many will be at risk. Wake up, America, and demand better leadership, service, and representation.