What’s This Talk About a Recession?

In recent weeks, the word recession has started creeping into business news and financial market coverage.

Is that cause for alarm or just another attention-grabbing headline? There’s no simple answer.

A recession is defined as two consecutive quarters of negative economic growth as measured by gross domestic product (GDP). But GDP is a lag indicator, so we may not know until sometime in 2023 if we lived through a recession in 2022.

One lead indicator that has signaled a recession may be on the horizon. It’s called the yield curve.

In an expanding economy, the yield curve slopes upward to the right. But in a slowdown, the curve can invert, and the yield on short-term Treasuries is higher than longer-term ones. An inverted yield curve suggests that investors have lost some confidence in the economy and have started shifting money around.

Some swear by the yield curve, pointing out that it’s inverted preceding every recession in recent memory. Others are not so certain. They explain that while today’s “nominal curve” did invert, the “real curve,” adjusted for inflation, tells a different story.

It’s not easy sorting through the economic noise these days. That’s why our team examines various indicators, including the yield curve. If we see the need for a portfolio change, we’ll explain why we are charting a new course.

April is Financial Literacy Month

April marks the start of Financial Literacy Month, a nationally recognized movement to promote and support financial understanding in children and teens. For many, it’s a fantastic opportunity to teach and connect with their children or grandchildren, and these kids are ready to learn! Recent data shows that nearly 74% of teens desire to be financially literate, and 86% want to learn how to invest.¹

Teens tune in
Every parent has questioned if their child is actually paying attention. But rest assured, our children and grandchildren are listening: 75% of teens in America identify their family as their most trusted source of financial education. In other words, our youngest savers and investors are looking to us for their financial education.²

How to start
It all begins with a frank conversation regarding finances. By demonstrating your openness to discussing what many consider a “taboo” topic, you’re also modeling how to approach finances for your young learner. In time, they’ll learn to view financial issues and goals clearly with as little unnecessary stress as possible.

A bright future
Financial literacy month has been shown to have a lasting, positive impact on our future investors. Children who are taught personal finance from a young age are more likely to secure lower-cost loans and grants when paying for college and less likely to rely on private loans or high-interest credit cards.³

If you decide to put your “teacher” hat on this month, let us know! We’re always happy to help educate and support our future generations.

9 Facts About Retirement

Retirement can have many meanings. For some, it will be a time to travel and spend time with family members. For others, it will be a time to start a new business or begin a charitable endeavor. Regardless of what approach you intend to take, here are nine things about retirement that might surprise you.

1. Many consider the standard retirement age to be 65. One of the key influencers in arriving at that age was Germany, which initially set its retirement age at 70 then lowered it to age 65.¹
2. Every day between now and the end of the next decade, another 10,000 baby boomers are expected to turn 65. That’s roughly one person every 8 seconds.²
3. The 65-and-older population is the fastest growing age group in the United States, and has grown by 34.2% over the past decade.³
4. Ernest Ackerman was the first person to receive a Social Security benefit. In March 1937, the Cleveland streetcar motorman received a one-time, lump-sum payment of 17¢. Ackerman worked one day under Social Security. He earned $5 for the day and paid a nickel in payroll taxes. His lump-sum payout was equal to 3.5% of his wages.⁴
5. Eighty percent of retirees say they are confident about having enough money to live comfortably throughout their retirement years.⁵
6. The monthly median cost of an assisted living facility is over $4,000, and 7 out of 10 people will require extended care in their lifetime.²
7. Sixty-two percent of retirees are dependent upon Social Security as a major source of their income. The average monthly Social Security benefit at the beginning of 2021 was $1,543.^5,6
8. Centenarians – in 2020 there were 92,000 of them. By 2060, this number is expected to increase to 589,000.⁷
9. Seniors age 65 and over spend over 4 hours a day, on average, watching TV.⁸

Conclusion

These stats and trends point to one conclusion: The 65-and-older age group is expected to become larger and more influential in the future. Have you made arrangements for health care? Are you comfortable with your investment decisions? If you are unsure about your decisions, maybe it’s time to develop a solid strategy for the future.