This Week In Your Wallet:
Market Slide, Stagflation and Labor Shortfall
Let’s start with the markets, shall we? Worldwide markets tumbled on Monday, as investors dumped government bonds, oil prices slipped and
cryptocurrencies crashed. Specifically, the S&P 500, which has fallen nine out of the last 10 weeks, dropped 3.9%, bringing its total decline from January to 21.8%. The crypto crash has gotten so bad that crypto lending platform Celsius was forced to pause all withdrawals, swaps, and transfers between users, citing "extreme market conditions," and Bitcoin is now trading at $23,809, down from nearly $60,000 just a few months ago.
Take a breath. We’ve known the markets have been jittery for months, and it’s okay if you’re feeling it, too. Higher-than-expected inflation and lower-than-expected economic growth is making us all nervous, since the Federal Reserve may have to raise interest rates higher and faster than expected to rein in rising prices — and this move could negatively impact the
economy. (The Fed is projected to boost interest rates by three-quarters of a point at their meeting on Wednesday.)
But I know that during times like these, many of us default to a position of wanting to do something — literally anything — to gain back some modicum of control over our money and futures. But I’ve said it before and I’ll say it again: There is only so much you can control right now. You can make sure you’re diversified, and rebalance if needed. You can invest more if you’re able, and you can stop checking your balances so often. Most importantly, you can acknowledge that any fear-driven decision tends to be a bad one. And while you’re watching out for a recession and inflation, you can also watch out for stagflation — and yes, they are very different things.
Don't be confused by all the buzzwords you’re hearing tossed around lately — stagflation is the combination of high inflation and a sluggish economy that isn’t growing. The World Bank warned on Tuesday that global economies could be at risk for stagflation, if not recession. David Malpass, president of the World Bank, said in the latest edition of the Global Economic Prospects report that "even if a global recession
is averted, the pain of stagflation could persist for several years."
Stagflation Hits The Globe
Across the pond, the U.K. is experiencing the fastest pace in consumer price growth in four decades, with an inflation rate of 9%, that’s forecasted to peak above 10% this year. While there aren’t yet high unemployment numbers (another major indicator of stagflation/recession) in Britain, there are other flickers of stagflation and a contracting economy causing alarm. Eshe Nelson reports in The New York Times that the country is "staring down the specter of stagflation, a ruinous mix of stagnant economic growth and rapid inflation."
But 9% inflation isn’t far off what we’re seeing here — in May, prices in the U.S. were 8.6% higher than they were a year ago, according to the Consumer Price Index. And some of the biggest increases were in the basic needs category: food, shelter, and energy. But items in the wants category of our budget are rising, too. Americans now expect they’ll be spending more on a range of purchases, from personal care products and home improvements to experiences and vacations. The majority of Americans — 61% — now say they’re worried about their financial situation as a result. So, how do we cope? Stay the course. Do an audit of where your money is going, and check in with your spending regularly. During inflationary times, it’s all the more important to keep a tight accounting of where your money is going to stay on track with your financial goals. Also, be open to trying new brands that are more economical (keeping an eye on shrinkflation) and if you know you’re going to be spending more, take a look at ways to save money this summer on everything from your next vacation to your backyard barbecue.
Becoming Your Own Boss
For months during the pandemic, the disheartening headlines rolled in about women in the workforce: More than 1.4 million women lost their jobs or dropped out of the workforce in 2021, losing twice as many jobs as men and only recouping half. But today, there’s a female entrepreneurship boom, and it’s those same women who left the workplace that are, at least in part, driving this surge. In 2019, women made up just 27% of new businesses, but in 2021 that number is 49% — the highest it’s ever been. Although we’re so thrilled for these women, and rooting for them every step of the way, it’s not necessarily been a choice they’ve made with joy. In many cases, women simply weren’t able to find jobs that afforded them the level of flexibility they needed, given their ever-increasing responsibilities of caregiving and work, so they decided to create their own. But there’s good
news on the horizon — women now have the ability to redefine work on our own terms, in a way that we’ve never been able to before, writes Fran Hauser in Fortune. Why? Because employers are finally ready to listen. More than 11 million jobs are open in the U.S. right now, more than any other time in history. It's an employee’s market, and companies are eager to get women back
through the door. In other words, if you’re not being offered the salary or flexibility you need, it’s time to ask. And if the first few companies you talk to aren’t budging, just keep looking. We promise there’s one out there that will be thrilled to help you make it work. And if you need a refresher on asking for what you need, here’s a great guide.
The Dark Side Of The Hot Jobs Market
And while we’re on the subject of jobs, let us share a cautionary tale that starts with a familiar refrain: Kids, stay in school. It bears repeating right now, given that many desperate employers are willing to pay large sums for talented people — including those who haven’t yet graduated. Abandoning your bachelor’s for cash is
the new dark side to the strong labor market, writes Jeanna Smialek in the The New York Times. Yes, a high salary offer can make it very tempting to skip out early on your degree, but an incomplete education can come
back to haunt you in a more competitive labor market. We know that statistically, those with degrees earn more and have more job stability in the long run. (Historically, it’s workers with less education and those who have been hired more recently who are the ones to lose their jobs when unemployment rises and the economy weakens.)
Have a great week,
Jean
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