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Slick TV ads often make financial planning and wealth management sound simple, but it’s usually not. Managing wealth requires knowing a lot about highly technical topics, like taxes, government regulations, and finance as well as history, psychology and how to communicate with loved ones about sensitive issues. This article highlights some of the knowledge needed to manage wealth and why it’s often so daunting without the help of an independent personal financial advisor who is familiar with your situation.
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Understanding The Federal Reserve Mandate To End Inflation
The Federal Reserve System, the nation’s central bank, has a dual mandate to pursue maximum employment and maintain price stability. These two priorities are currently treated equally, but that was not always the case. In fact, the Fed’s bias toward maximizing employment was a critical driver of the stagflation that plagued the U.S. in the late 1960s and 1970s. Recognizing the need to balance price stability and maximum employment, in 1977, Congress revised the Federal Reserve Act.
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Fed Governor Kugler Details Inflation And Economic Outlook
The 12-month inflation rate, as measured by the personal consumption expenditures (PCE) index, was 2.6% in December, down from its peak of 7.1% in June 2022, and the six-month rate for PCE inflation was even lower, at 2%, which is the target rate set by the Federal Reserve.
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Why Rates May Not Be Cut Until June
The cost of a loan to buy a home, car, college education, and achieve the American Dream is staying the same for now. As expected, Federal Reserve Chairman Jerome Powell said the central bank did not lower loan rates following the Fed’s Wednesday, Jan. 31, 2024, policy meeting.
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Practical Suggestions For Achieving Your 2024 Resolutions
New Year’s resolutions usually fail because they‘re often too hard to achieve. After six months, only 10% of people who make resolutions achieve them or remain committed to them, , according to a study by Dr. Mark Griffiths, a Chartered Psychologist and Distinguished Professor of Behavioral Addiction at the Nottingham Trent University. What can you do to make financial, medical, or other personal resolutions more likely to be achieved?
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A Sign Of Progress In Solving U.S. Economic Problems
The Federal Reserve appears to be pulling off a feat most experts did not believe it could: ending its aggressive inflation-fighting campaign of 11 interest rate hikes without tipping the U.S. economy into a recession.
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Fed Keeps Rates Unchanged; Expects Easing In 2024
To promote transparency and free markets, the Federal Reserve System began publishing the opinions of the 19 U.S. central bankers that decide interest rate policy.
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Have You Logged Into Your Social Security Account?
Have you logged in to your Social Security account? Creating an online account at SSA.gov is an important first step in understanding your retirement income situation. However, only about 60 million of the 160 million individuals in the U.S. labor force who have Social Security accounts have created a way to access the Social Security Administration’s website.
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The Great Fake Out Of 2023 Is Poised To Extend Into 2024
All year long, the economy and stock prices have fooled experts and consumers, outperforming expectations month after month.
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Test Your Financial Planning IQ
The five questions below are a challenge meant to allow you to assess your knowledge of investing, tax and financial planning. If you have been following our news stream, this quiz draws on familiar ground. The answers are below.
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Planning Briefs
Federal Reserve Likely To Dial Back Rate Hikes But They’re Far From Over
Published Thursday, December 1, 2022 at: 8:59 AM EST
The Federal Reserve System’s aggressive rate-hike campaign of 2022 is likely to be dialed back when U.S. central bankers meet in two weeks but is far from over.
Federal Reserve Chair Jerome Powell, in a speech today at the Brookings Institution, said a 50-basis-point rate hike would be on the table at the Fed’s December 13 and 14 policy meeting. Since March, the nation’s central bank has raised lending rates six times. After a quarter-point hike in March and a half-point hike in May, the Fed hiked rates four more times by three-quarters of 1% in an aggressive effort to end inflation by slowing economic growth.
Fed chair Powell’s remarks offered no big surprises but did go into more detail than previous public pronouncements about how a shortage of workers is making inflation harder to control. Here’s a summary of important points investors need to understand:
- Inflation remains near a 40-year high and has only begun to show signs of slowing from its current level, and the Fed’s preferred metric of inflation – the Personal Consumption Expenditure Deflator index – must drop from its current level of about 6% much closer to the Fed’s target rate of 2% to prompt a reversal in monetary policy.
- The rate hike cycle has slowed growth in economic activity to well below its longer-run trend rate of about 2% but this trend must be sustained by the Fed.
- Supply chain bottlenecks in goods production are easing and goods price inflation appears to be easing as well, and this, too, must continue.
- Housing services inflation, which measures the rise in the price of all rents and the rise in the rental-equivalent cost of owner-occupied housing, has continued to rise sharply and will probably keep rising well into next year, but we will likely see housing services inflation begin to fall later next year.
- A very important factor in inflation in 2023 will be the labor market, which is out of balance. The U.S. has a shortfall of about 3.5 million workers. The illustration above shows the shortfall on the right and shows that this imbalance has not occurred in over 40 years. Wage growth remains well above levels that would be consistent with 2% inflation over time.
- The labor shortage reflects both lower-than-expected population growth and a lower labor force participation rate. Participation in the labor force by those from age 16 to 65, dropped sharply at the onset of the pandemic because of sickness, caregiving, and fear of infection. It was expected that participation in the labor force would return as the pandemic faded. For workers in their prime working years, it mostly has. Overall participation, however, remains well below pre-pandemic trends.
- Part of the shortage reflects workers who left the labor force because they are sick with COVID-19 or continue to suffer lingering symptoms from "long COVID". But recent research by Fed economists finds that the participation gap is now mostly due to excess retirements — that is, retirements in excess of what would have been expected from population aging alone. These excess retirements might now account for most of the shortfall in the labor force.
“Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” Mr. Powell said. “Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.”
It is likely that restoring price stability will require holding policy at a restrictive level for some time. History cautions strongly against prematurely loosening policy,” Mr. Powell said. “We will stay the course until the job is done.”
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