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Holiday Shopping This Summer

Even with lockdowns, fewer parties and reduced travel, the National Retail Federation reports that in 2020, Americans spent $209 billion on holiday-related purchases — averaging about $998 per person.1

If it seems a bit early to be talking about holiday shopping, consider that you may want to shop earlier than ever this year. That’s because the combination of periodic COVID-related shutdowns and the bizarre logjam at the Suez Canal this spring continues to affect shipping ports around the world. In fact, industry experts say shipping disruptions could result in a shortage of goods this holiday season. However, a key reason shipments may be slow this year is that many retailers have already placed their orders for the holiday season, which is exacerbating traffic and congestion problems in the shipping industry.2

Manufacturers have been warned to develop alternative solutions for their supply chains and sales strategies to deal with lack of inventory when the holidays roll around. Given that demand will be high and supplies low, this will likely include raising prices of goods. Many customers may feel that certain items are not worth the higher price and will go looking for alternatives. Retailers should bear this in mind and have less expensive and off-brand options available.3

To help ensure you don’t overspend this year, you may be able to find certain gift items now at more affordable prices before they are priced higher or unavailable altogether by the end of the year. Ask family members to consider these factors when compiling their list of wants, perhaps including alternative items and goods made in the U.S. that are unlikely to experience shipping delays. Don’t forget to support local businesses and artisans for their current inventory, and consider supporting artists, crafters and vintage retailers nationwide at online shops such as Etsy.com. You may end up spending less than usual this holiday season by following these strategies.

Also, consider helping cash-strapped adults on your list by offering to pay for regular insurance policies – such as their homeowners or auto insurance. That’s a generous surprise to find in one’s stocking.

Then again, don’t forget the usual holiday shopping strategies, such as buying seasonal items when they tend to go on sale. Here are a few examples:4

  • August – Summer clothing and swimwear, school supplies and laptops; take advantage of “tax-free weekends” that many states host in August, which waive sales taxes on clothing, school supplies and even electronics.
  • September – Outdoor furniture and grills, leftovers from back-to-school sales, appliances and mattresses.
  • October – Older model iPhones and winter clothing.

Several national retailers, including Best Buy, Walmart and Target, have already announced that their stories will be closed on Thanksgiving Day — reversing previous trends to get Black Friday sales started earlier. In fact, the pandemic morphed many shoppers from in-store to online enthusiasts, so don’t be surprised to see website inventories reduced more quickly as well.

1 Emily VanSchmus. Yahoo. June 16, 2021. “7 Budgeting Tips to Help You Save Money at the Holidays.” https://www.yahoo.com/lifestyle/7-budgeting-tips-help-save-233507890.html. Accessed June 16, 2021.

Kate Duffy. Business Insider. June 14, 2021. “A COVID-19 outbreak at a major Chinese port is worsening the global shipping crisis, which could disrupt orders for the holiday season, experts say.” https://www.businessinsider.com/shipping-delay-crisis-holiday-christmas-thanksgiving-orders-covid-suez-canal-2021-6. Accessed June 16, 2021.

3 John LeBaron. DigitalCommerce360. May 18, 2021. “Why now is the time to prepare for the 2021 holiday season.” https://www.digitalcommerce360.com/2021/05/18/why-now-is-the-time-to-prepare-for-the-2021-holiday-season/. Accessed June 16, 2021.

4 Kristin McGrath. US News & World Report. Jan. 11, 2021. “The Best Days to Shop in 2021.” https://money.usnews.com/money/blogs/my-money/articles/shopping-holidays-the-best-days-to-shop-this-year. Accessed June 16, 2021.

5 Melissa Repko. CNBC. June 9, 2021. “Best Buy says stores will close Thanksgiving Day, to offer Black Friday deals online.” https://www.cnbc.com/2021/06/09/holiday-2021-best-buy-closed-on-thanksgiving-day-black-friday-deals-online.html. Accessed June 16, 2021.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.

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Lessons From the Pandemic

They say we don’t always appreciate what we have until it’s gone. That was one of the big lessons learned during the pandemic — but there are others. We learned a lot about the quirks and interests of family members — which tend to change as our children grow and we don’t always realize how much.

We also learned to never take good health for granted. For many who either didn’t contract COVID-19 or did so with mild symptoms, it’s hard to appreciate that one small change in a person’s health — asthma or diabetes — could be the difference between some people not taking the disease seriously and others dying.

We also may have learned a thing or two about financial security and the value of emergency funds and insurance safety nets. If it has occurred to you that your household finances could be in better shape, particularly if we have more pandemics and more shutdowns in the future, please give us a call. We can help you position assets for reliable income and emergency cash.

 Family

Students switched to online classes. College graduates moved back home with no job in sight. Breadwinners either worked from home or risked their health to serve in essential positions or to keep their businesses afloat. With fewer entertainment venues available, we were either all living in close quarters or living alone with greater social isolation than ever before. As of last July, 52% of people ages 18 to 29 lived with a parent. That’s the highest number in more than a century, according to the Pew Research Center. While some households may have fared better than others, in the best-case scenarios families learned to spend days upon days together sharing (and negotiating) indoor spaces, preparing meals together, walking and working in the yard, and talking. One parent of a boomerang Millennial observed, “You raise your kids to grow up, and somebody else gets to meet them like this, as adults. But now I get to know her like this.”1

Education

The pandemic may be the catalyst to effectively evolve our nation’s higher education system. At least some form of hybrid classes (online and in-person) are expected to continue permanently. In addition, colleges are becoming more focused on how to better prepare students to work (and find) jobs when they graduate, including more for-credit internships with local employers. Perhaps the growing cost of education may begin to subside, since the fees universities charge for student services has grown four times as fast as those for instruction. With so many students graduating with student debt throughout the last two decades, today’s young adults are questioning the value of a college education altogether. Instead, they are focused on a higher return of investment for taking on that level of debt. Today, only 66% of students say they believe a college degree offers a good return on investment, compared to 78% last August.2

Jobs

COVID redefined the concept of an “essential worker.” It is no longer just fire, police, emergency and hospital workers. The category has expanded to include grocery store stockers and clerks, factory floor workers and delivery drivers. Meanwhile, employees at every income level began to question their career choices, some not just abandoning jobs but switching professions. With more people enjoying the work-from-home option, they are less focused on how much they can earn but how it provides for their quality of life. If they earn less but are happier working from home, many are willing to make that sacrifice. As of January, a Pew survey revealed that 66% of unemployed people have seriously considered changing occupations.3

Saving and Spending

Since we could go nowhere and do nothing, millions of Americans saved more money in the early months of the pandemic. The Federal Reserve Bank of St. Louis reported that in 2020, the personal savings rate grew from 8.3% in February to 33.7% in April. By January 2021, it still remained as high as 20.5%. The ability to work from home meant fewer people dressed for work or paid dry cleaning bills. According to the U.S. Bureau of Economic Analysis, Americans spent $23.9 billion less on clothing and footwear in the fourth quarter of 2020 than in the fourth quarter of 2019. There was less driving in both business and commercial markets, reflecting $88.2 billion less spent on gasoline and other energy goods than in 2019. Additional savings resulted from preparing more meals at home and exercising at home in lieu of gym fees. 4

Health

The relatively quick onset of COVID-19 showed just how fast industries could adapt when necessary, particularly the health industry. Policymakers are driven to focus more on wellness, prevention and public health. Employers (and schools) have a greater appreciation of how precautionary measures can help prevent the spread of other airborne and infectious diseases (during cold and flu season). And while the U.S. has been debating health care reform for years, there is now a greater appreciation of how value-based payment models can create a more resilient health care system.5

1 Soumya Karlamangla. The Los Angeles Times. June 9, 2021. “A pandemic love story you haven’t heard before: Parents and their adult children.” https://www.latimes.com/california/story/2021-06-09/adult-kids-parents-have-unique-covid-love-stories. Accessed June 12, 2021.

2 Bianca Quilantan. Politico. Jan. 25, 2021. “How the pandemic forever changed higher education.” https://www.politico.com/newsletters/weekly-education-coronavirus-special-edition/2021/01/25/how-the-pandemic-forever-changed-higher-education-792939. Accessed June 12, 2021.

3 Joanne Lipman. Time. June 1, 2021. “The Pandemic Revealed How Much We Hate Our Jobs. Now We Have a Chance to Reinvent Work.” https://time.com/6051955/work-after-covid-19/. Accessed June 12, 2021.

4 Stephen Schramm. Duke Today. May 5, 2021. “How We’re Saving Money During the Pandemic.” https://today.duke.edu/2021/05/how-we’re-saving-money-during-pandemic. Accessed June 12, 2021.

5 Laura Joszt. American Journal of Managed Care. May 17, 2021. “Building a More Resilient and Sustainable Health System.” https://www.ajmc.com/view/building-a-more-resilient-and-sustainable-health-system. Accessed June 12, 2021.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.

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Putting Inflation Expectations in Persepctive

Historically, inflation has been highly correlated with unemployment levels. When more people were out of a job, inflation was lower. As more people got jobs, inflation increased. From an economic point of view, this makes sense. Jobs increase income, which increases spending, which increases demand — supplies drop and prices rise. The opposite is true when fewer people hold jobs.1

That’s one thing that makes economic policy so difficult to set. It requires a careful balance of cause and effect, keeping in mind that what’s good for some portions of the population is bad for others. During periods of rising inflation, it’s important to monitor how it might affect us personally, from buying household goods to managing a portfolio. While economists are keeping an eye on the direction and momentum of rising inflation now, you may want to consider how higher inflation may affect your long-term financial planning goals and be ready to act accordingly. Contact us if you’d like to review what possible impact this may or may not have on your unique situation.2

In April, the inflation rate grew to 4.2%, which drove speculation that the Federal Reserve might reconsider its current stance on interest rates and monetary policy. The consumer price index (CPI) rose significantly for used cars and trucks, food, housing, airline fares, recreation, motor vehicle insurance, household furnishings and operations.

Currently, the federal funds target rate (which serves as the benchmark for bank interest rates) ranges from 0 to 0.25%. Previously, the Fed indicated that it expects to maintain a near-zero interest rate through 2023. The central bank targets an average inflation rate of 2 percent throughout time, so it appears not particularly concerned with the recent spike. In recent comments, Fed chairman Jerome Powell noted that the committee was monitoring “a broad range of financial conditions,” rather than focusing on addressing just one.3

Besides, Fed officials expected inflation to increase as the U.S. economy reopened. The surge in prices is expected to be temporary, as it is simply a matter of a supply crunch after months of pent-up demand. It’s normal that prices for hotel rooms, rental cars, used vehicles, sporting events and restaurants will go back to their pre-pandemic levels. Once jobs, consumerism and inflation reach a level of normalization, the Fed will consider whether it needs to raise the target federal funds rate.4

In terms of the investment market response, CNBC’s Jim Cramer observed that people expected high inflation due to stimulus and jobs numbers. As a result, when the numbers were announced the market didn’t panic – thus far it has taken the high inflation number in stride. Cramer went on to note that raising interest rates won’t solve all the problems that occurred last year. In many cases, only time can resolve them.5

Likewise, time may resolve the current labor shortage, as restaurants and hotels struggle to find enough workers to fill open jobs. Additionally, the current strong economy could solve for the national minimum wage debate without the need to pass new legislation. For example, retailers Amazon, Costco and Target have all voluntarily increased wages to $15/hr or more to meet demand. This strategy follows the traditional economic principle of supply and demand, in which the only way to stay competitive in the labor market is to increase wages. After all, workers have to keep up with the rising costs of housing, childcare, food and transportation.

Speaking of childcare, after decades of working mothers in the labor market, it will be interesting to see if the rising economy also can address the problem of childcare. During the pandemic, more women than men left their jobs to stay home with children sidelined from schools and childcare centers. This phenomenon may continue until employers — or legislators — come up with a solution. It will be difficult for the American economy to advance while there are millions of unemployed women staying home because of trouble securing child care. This could however be offset to some degree by the ability to work from home due to technology depending on the industry and skillset of the employee.

The pandemic also convinced twice the number of Baby Boomers to retire than the previous year. Raising wages and providing more childcare resources, paid parental leave and paid vacation time may be the only way to woo more people back into the labor force.6 

1 Greg Depersio. Investopedia. Aug. 22, 2020. “What happens when inflation and unemployment are positively correlated?” https://www.investopedia.com/ask/answers/040715/what-happens-when-inflation-and-unemployment-are-positively-correlated.asp. Accessed June 11, 2021.

2 Greg Iacurci. CNBC. June 8, 2021. “Gold as an inflation hedge? History suggests otherwise.” https://www.cnbc.com/2021/06/08/gold-as-an-inflation-hedge-history-suggests-otherwise.html. Accessed June 11, 2021.

3 Knowledge@Wharton. June 1, 2021. “Inflation: What Lies Ahead?” https://knowledge.wharton.upenn.edu/article/inflation-what-lies-ahead/. Accessed June 12, 2021.

4 Patti Domm. CNBC. June 11, 2021. “Inflation is hotter than expected, but it looks temporary and likely won’t affect Fed policy yet.” https://www.cnbc.com/2021/06/10/inflation-hotter-than-expected-but-transitory-wont-affect-fed-policy.html. Accessed June 11, 2021.

5 Tyler Clifford. CNBC. June 10, 2021. “Jim Cramer reacts to red-hot inflation number: ‘The market took it in stride’.” https://www.cnbc.com/video/2021/06/10/jim-cramer-reacts-to-inflation-report-the-market-took-it-in-stride.html. Accessed June 11, 2021.

6 Sarah Hansen. Forbes. May 15, 2021. “Could Covid-19 Worker Shortages Create A $15 Minimum Wage—Even Without A New Law?” https://www.forbes.com/sites/sarahhansen/2021/05/15/could-covid-19-worker-shortages-create-a-15-minimum-wage-even-without-a-new-law/?sh=1ae0db234929. Accessed June 11, 2021.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

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What’s On Tap For Jobs

Jobs data can be confusing. For example, the New York Federal Reserve reported in May that among businesses active before the pandemic, 35% remain closed, only 3% of service businesses still closed were likely to reopen, and only 4% of workers will be rehired by currently closed small businesses.1

One industry that has experienced the brunt end of the pandemic is food and beverage. Close to half of all restaurant workers were laid off in spring 2020, and the industry remains down 1.8 million jobs from pre-lockdown numbers.2

On the flip side, resort communities and amusement parks say they can’t find enough job applicants to fill summer positions. That’s particularly detrimental now that people are beginning to travel more, at least domestically. Places like Martha’s Vineyard usually hire labor on temporary visas this time of year, but given how poorly the rest of the world is coping with the pandemic, it’s been difficult to recruit from abroad.3

Job numbers are a leading indicator for the economy. Growing consumer demand creates jobs, and more people working generates even higher consumer demand – and a larger tax pool. The job market is expected to continue growing – barring any setbacks by a vaccine-resistant strain of the coronavirus – which should continue to drive the U.S. economic recovery. If you were affected by the virus, perhaps even benefitting by saving more money, we can help shore up your household finances with versatile insurance products offering both protection and income for emergencies and retirement. Contact us to learn more.

While the struggle remains for many small businesses, overall U.S. data continues to build in a positive direction. In May, the U.S. added 559,000 jobs –many going directly to severely affected industries. For example, food and beverage hired 186,000 more workers, the hospitality industry (composed of amusement parks, gambling and recreation) hired 58,000, and hotels picked up 35,000 jobs. With students resuming in-person classes around the country, state and local schools added 103,000 more jobs and private schools brought on 41,000. The health care sector increased by 46,000 jobs while manufacturing, transportation and warehousing sectors grew by 46,000 positions.4

However, the labor story has been quite different with white-collar jobs. Many companies were able to continue operations and full employment during the pandemic by shifting employees to remote work. Now, on the recovery side of the pandemic, many of those businesses are rethinking their traditional staffing model.

A recent poll by consulting firm West Monroe revealed a new hybrid trend that blends both home and onsite work. About half of executives surveyed said they expected to deploy their hybrid plans by the end of the summer.5 Note that remote work doesn’t just benefit employees – it also offers businesses the opportunity to recruit talent from anywhere in the world as opposed to just the local labor pool.

1 Juliana Kaplan. Business Insider. May 5, 2021. “Only 4% of laid-off service workers will get their old jobs back, study finds.” https://www.businessinsider.com/laid-off-service-workers-only-4-percent-old-jobs-back-2021-5. Accessed June 4, 2021.

2 Sarah Ewall-Wice. CBS News. May 5, 2021. “Biden touts direct relief for businesses with Restaurant Revitalization Fund.” https://www.cbsnews.com/news/joe-biden-restaurant-revitalization-fund/. Accessed June 4, 2021.

3 Megan Cerullo. CBS News. May 5, 2021. “Resorts and theme parks face worker shortage as they open for summer.” https://www.cbsnews.com/news/seasonal-resorts-face-summer-worker-shortages/. Accessed June 4, 2021.

4 Eli Rosenberg. The Washington Post. June 4, 2021. “U.S. economy adds 559,000 jobs in May, as the recovery shows signs of strength.” https://www.washingtonpost.com/business/2021/06/04/jobs-report-may-unemployment-shortage/. Accessed June 4, 2021.

5 Kathryn Moody. HR Dive. April 21, 2021. “1 in 5 employers already have implemented hybrid work, poll says.” https://www.hrdive.com/news/1-in-5-employers-already-have-implemented-hybrid-work-poll-says/598781/. Accessed June 4, 2021.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.

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