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Powell talked up the economy during a recent two-day hearing before both chambers of Congress. “Overall, we see the risk of the economy unexpectedly weakening as roughly balanced with the possibility of the economy growing faster than we currently anticipate,” in prepared remarks. Which is why the Fed has and is likely to do so another two times this year. The central bank is also reducing its historic balance sheet, with total assets from $4.47 trillion this time last year. The Fed plans to only increase its historic de-accumulation in the future. The wage issue
Savers are enjoying the benefits of higher yields, and yet pay has failed to keep up. , for instance, were exactly where they were the year before, once you count for inflation. In fact, wage gains, once adjusted for inflation, haven’t risen by 1 percent year over year . This is surprising to a lot of people. Not only is the gross domestic product rising, but the $1.5 trillion GOP tax cut signed in December was supposed to lead to employers giving their employees more money. Economists, meanwhile, to explain what’s going on. But there are a lot of theories. In his testimony to Congress, Powell mentioned one: , which is a gauge of how efficiently a company makes its products. Others have pointed to the older well-paid workers retiring and being replaced by cheaper younger ones, a worse employment situation than meets the eye, or the increasing cost of fringe benefits, like health insurance. Some say businesses have too much power, while others say wages are rising just as they should. What this means for you
After holding interest rates near zero for a decade, the Fed is finally rewarding savers. Borrowers, on the other hand, are getting hit. Credit card APRs have risen from 16.93 percent in early May to . Unfortunately, low inflation-adjusted income gains mean you may not be able to take advantage. About 4 in 10 Americans don’t have the cash to pay off a $1,000 unexpected expense, and middle-income Americans’ savings haven’t budged in 15 years, while are on the rise. With average pay and inflation joined at the hip, you need to bank any extra cash that comes your way. Your next bonus or tax refund should go directly into a to buttress your emergency fund or to pay down debt. Automatically dedicate a small percentage of your pay to savings, and use a balance transfer card to give yourself time to pay down debt without interest if you carry a balance. Move your savings from your low-yielding traditional brick-and-mortar bank to . Be proactive. SHARE: Taylor Tepper Related Articles