July 30, 2022 Issue, Page 11 of 16

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July 30, 2022 News US economy shrinks for a second a... tie age Coffeetine Colamn quarter, fueling recession fears woes With Andy & Renie Bowman ——— | ‘The report will add to po- ing. That weakness is likely to outlays on goods shrank 4.4%. “Hammers, Pigs, And Cows Reade Pickert, Bloomberg News litical headaches for President throw fuel on an already heat- Inflation-adjusted spending Joe Biden and complicate the ed debate about if or when the data for June will be released The drumbeat of recession Fed’s calculus over how aggres- US. enters a recession. grew louder after the U.S. sively to raise interest rates. economy shrank for a second While the common rule of Friday. Americans are facing high- In addition to the slowdown thumb for recessions is two er prices for virtually every- Can Make A Farmer Cuss” straight quarter, as decades- in household spending, the consecutive quarterly declines thing from gas to food to rent. Andy has always said that his dad, whom I never had the priv- high inflation undercut con- report also showed declines in GDP, the official determina- Wages have increased but not ilege of meeting, was a fairly mild-mannered easy-going guy. sumer spending and Federal in business investment, gov- tion of ends and beginnings fast enough to keep pace with Respected and well-liked in his rural community, a boys’ base- Reserve interest rate hikes sty- ernment outlays and housing. of business cycles is made by inflation, driving consumer ball coach, and a church-goer - seems he had a friendly word mied businesses and housing. Inventories also weighed on a group of academics at the sentiment to multiyear lows. for everyone. Even when riled, he wasn’t a man to easily lose Gross domestic product fell GDP, while a narrower trade National Bureau of Economic ‘The Fed is determined to limit control of his temper. Like everyone, he did have one, he just at a 0.9% annualized rate af- deficit added to the figure. Research. inflationary pressures, some usually kept it pretty well under. ter a 1.6% decline in the first ‘A key gauge of underlying Two-year Treasury yields of which are due to factors Except. three months of the year, the demand that strips out the tumbled after the report po- outside of their control — like From listening to the family telling stories of yesteryear, Commerce Department's pre- trade and inventories compo- tentially reduced chances of Russia’s war in Ukraine. liminary estimate showed nents — inflation-adjusted fi- further aggressive Fed rate there were two things in life that made that man lose his grip; ‘Thursday. Personal consump- nal sales to domestic purchas- increases, while U.S. stock fu- ratePowell said that while more one was cows and pigs that refused to cooperate when they were increases are forthcom- being loaded into the chute. And the other that lit his fuse? Hit- tion, the biggest part of the ers — fell at a 0.3% pace in the tures erased losses and the economy, rose at a 1% pace, second quarter compared with dollar fell. ing, the sizes of the moves will ting his thumb with a badly-aimed hammer blow. be data dependent. Currently, a deceleration from the prior a 2% gain in the prior period. Retailers like Walmart Inc. “the labor market is extremely From what I understand, a stubborn Bossy The Cow or Pearl period. ‘The report illustrates how and Target Corp. have slashed ‘The Pig could suddenly become the recipient of very imagina- The median projection in a inflation has undercut Ameri- their profit forecasts, and a tight and inflation is much too tive names not normally given to four-legged animals. And Bloomberg survey of econo- cans’ purchasing power and slew of tech companies, in- high,” he said. on fence-building days? The air on their farm would take on a mists called for a 0.4% advance tighter Fed monetary policy dluding Shopify Inc., have an- Last quarter, inflation-ad- whole new shade of blue when his dad splattered his thumb at in GDP and a 1.2% rise in con- has weakened interest rate- nounced plans in recent weeks justed business investment that task. Then his kids would spend the next half-hour search- sumer spending. sensitive sectors such as hous- to cut workers. Others, like eased 0.1%, reflecting declines ing for his hammer. Eventually finding it in the neighbor's pas- Apple Inc. and Microsoft Corp. in both spending on structures ture. and equipment. Outlays on in- Sound kinda familiar? You may not be a hammer-wielding are slowing hiring. Fed announces another tellectual property products farmer with bad aim and five kids snickering when you miss. Broader weakness in a la- bor market that’s shown only rose solidly. Residential investment And you may not be the proud owner of panicked pigs and cows limited signs of cooling would plunged at a 14% annual that suddenly have their own ideas when it comes to being load- remove a key source of sup- the largest decline sincepace, big interest rate hike port for the economy and help start of the pandemic and the re- ed up and taken to the slaughter house. But. Probably you are the owner of a temper. Whether it re- shape the course of monetary to thwart inflation. minds people of instantly combustible Fire From Hell Itself, or policy later this year. flective of how high borrowing slow simmering Volcanic Lava, you most likely own one. Seems “We think it’s necessary to costs along with rapid infla- to be part of being a human being. I have never met anyone yet tion have squeezed the hous- When will it stop? news conference Wednesday have growth slow down,” Fed ing market. Sales have been Chair Jerome Powell said at a falling for months, and build- who absolutely never has a flareup of that ‘thing’ inside of us, that attitude that lets those around us know we are not a happy camper. after another 75 basis-point ers are increasingly downbeat But maybe, you actually are known worldwide as Calm Calvin Don Lee, Los Angeles Times hike in interest rates. “We ac- about future demand. or Sweetheart Sara. You are one of those rare species who never tually think we need a period The report showed trade of growth below potential in added 1.43 percentage points shows any anger or disgust, and never disagrees with anyone. WASHINGTON — In the most aggressive back-to-back inter- order to create some slack so to the percent change in GDP, Then I would venture to guess you may privately deal with est rate increases since the early 1980s economic crisis, the Fed- that the supply side can catch while the change in invento- things like tension headaches, upset stomach, sudden diarrhea, or stomach ulcers. Not a good trade-off. up. We also think that there ries subtracted 2 percentage eral Reserve on Wednesday announced another three-quarters of a percentage point hike and signaled more to come in its effort will be, in all likelihood, some points. Better plan? Learn to express your displeasure, (without to beat back inflation despite the risk of a recession. softening in labor market con- The personal consumption a missing hammer) listen to the opposing opinion if there is The Fed’s hefty increase in its benchmark rate, which will ditions.” expenditures price index, an any, create a workable solution, ask and give forgiveness when mean higher interest rates on credit cards, home and auto loans inflation measure followed by According to a separate re- needed, and then move on. and other such purchases, seeks to curb the strong consumer de- Fed officials, grew an annual- port Thursday, applications for Life is way-y-y-y-y-y too hard to spend your time holding mand and spending that have been a major factor in driving up unemployment benefits last ized 7.1% fora second quarter. your emotions in so tightly that you become ill. You will eventu- prices. week were higher than fore- Stripping out food and energy, ally find yourself spending a portion of your time dealing with Fed Chairman Jerome H. Powell, at a news conference after cast. the index rose 4.4% after ris- that illness, instead of just simply living openly and honestly. the policy rate announcement, said the economy is clearly slow- The GDP data showed ser- ing 5.2%. Monthly PCE price Learn to feel it, express it, and deal with it. ing, with consumer activity, business investment and housing vices spending accelerated to a data will also be released Fri- But just remember, everyone else is dealing with difficult markets all softening. But noting the still-robust job growth, he 4.1% annualized rate, though day. emotions and situations too. Let’s cut each other some slack. said he doesn’t think the U.S. is currently in a recession and that the Fed plans to keep raising interest rates over the next several months to tamp down inflation, although at a slower pace. 529 plans: Underused but valuable Stock markets rose significantly, with the Dow gaining 1.4% In just a few weeks, students money? ested in any type of postsec- savings tool, and only 13% and the broader S&P 500 index closing 2.6% higher. will be heading off to college Personal savings accounts ondary education or training. are actually using it, again ac- ‘The central bank’s efforts will also have profound implications — and parents will be getting are the top vehicle Americans And a 529 plan can pay for cording to the Edward Jones/ that go beyond the U.S. and global economies. out their checkbooks. With-are using for their education qualified expenses at trade or As the Fed tries to put the brakes on inflation without skid- out a college-bound student funding strategies, according vocational schools, including Morning Consult study. ding the country into a recession, it is intensifying political prob- in your home right now, you to the Edward Jones/Morning apprenticeship programs reg- But as the cost of college and lems for both Democrats and Republicans ahead of the Novem- might not be thinking much Consult survey. But there are istered with the U.S. Depart- other postsecondary programs ber congressional elections. about tuition and other higherother options, one of which ment of Labor. continues to rise, it will be- education expenses, but if you is a 529 plan, which may offer Payment of student loans Both parties, but especially Democrats, could face voters’ ire if have young children, these more attractive features, in- ~ A529 plan can help pay off come even more important for prices keep rising in the months just ahead or a downturn leads costs may eventually be of cluding the following: federal or private student parents to find effective ways to lost jobs and other unwelcome consequences. concern — so how should you Possible tax benefits - If you loans, within limits. to save for their children’s fu- If there are bright spots for President Biden and his party, it’s prepare for them? invest in a 529 education sav- Keep in mind that state-by- that gas prices have come off their highs in June and there’s posi- It’s never too soon to start ings plan, your earnings can state tax treatment varies for ture education expenses. So, tive news in an economic indicator that most Americans don’t saving and investing. Unfortu- grow federally income tax-free, different uses of 529 plans, consider how a 529 plan can usually pay much attention to: the value of the dollar against for- nately, many people think that provided the money is used for so you'll want to consult with help you and your family. And eign currencies. they have a lot of “catching qualified education expenses. your tax professional before the sooner you get started, the One offshoot of the Fed's rate-hike campaign has been a surge up” to do. In fact, nearly half (Withdrawals not used for putting a plan in place. better. in the dollar in recent months, which is making products from of Americans say they don’t these expenses will generally Despite these and other ben- Europe, Asia and other parts of the world cheaper for American feel like they’re saving enough incur taxes and penalties on efits, 529 plans are greatly un- buyers. to cover future education ex- investment earnings.) If you This article was written by Ed- penses, according to a 2022 invest in your own state’s 529 der-utilized. Only about 40% ward Jones for use by your local Since the U.S. purchases trillions of dollars in imported prod- survey conducted by financial plan, you may receive state tax of Americans even recognize ucts each year — including a wide array of things such as cloth- services firm Edward Jones benefits, too, depending on the 529 plan as an education Edward Jones Financial Advisor. ing, electronics, flowers and fresh vegetables — the stronger dol- with Morning Consult, a glob- the state. lar is starting to make it a little easier for many shoppers to deal al research company. Flexibility in naming the with inflation for some goods. Of course, it’s not always beneficiary - As the owner of “That's one of the very few forces working against food price easy to set aside money for the 529 plan, you can name inflation,” said Ricky Volpe, an agribusiness professor at Cal Poly college when you're already anyone you want as the benefi- San Luis Obispo, noting persistent food-supply challenges in- dealing with the high cost of ciary. You can also change the Edward Jones, Member SIPC volving labor, weather, transportation and energy. living, and, at the same time, beneficiary. If your eldest child trying to save and invest for foregoes college, you can name In June the cost to U.S. consumers for food produced at home 2014 W. 3rd | Elk City, OK 73644 retirement. Still, even if you a younger sibling or another was 12.2% more than a year earlier. That helped push up overall can only devote relatively eligible relative. inflation to 9.1%, a four-decade high. Cereals and breads, eggs and milk, as well as poultry products have been rising even faster modest amounts for your chil- Support for non-college pro- dren’s education, these contri- grams — Even if your children Robert Stephens (580) 225-3156 in recent months. By comparison, prices for imported foods in- butions can add up over time. don’t want to go to college, it Financial Advisor [email protected] cluding vegetables and fish have been trending down lately. But where should you put your doesn’t mean they're uninter- Got a Great Local News Story? Tell us about it today! E Send us an email to [email protected] or give us a call at 580-225-3000!