Hi, How Can We Help You?

Unraveling This Summer’s Unusual Economy

Unraveling This Summer’s Unusual Economy

Unraveling This Summer’s Unusual Economy

While 2021 was a boom year for the U.S. economy, it started to crack in the first quarter of 2022. Over the first three months of 2022, Gross Domestic Product (GDP) decreased at an annual rate of 1.6%, down from a 6.9% increase in the fourth quarter of 2021. Throughout the second quarter of 2022, GDP growth predictions fluctuated, leaving economists all over the world unsure of what to expect. Indeed, the summer of 2022 has given rise to some unusual economic conditions, and if you are currently saving for retirement, they can make it difficult to implement a sound investment strategy for the future.

If the economy has your head spinning, you are not alone. The retirement phase experts at Crash Proof Retirement have an analysis of these conditions, as well as some strategies that you can use to beat the uncertainty of market volatility and give yourself peace of mind.

Inflation and Gas Prices

In June, nationwide gas prices recorded their highest levels in history. Rising gas prices were a major contributor to the rampant inflation we saw in the first half of 2022; in fact, inflation was 9.1% in June, its highest level since 1981. Although prices have remained high for a range of consumer goods, gas prices actually began to reverse course in July. Data from the American Automobile Association shows that since June 14th, prices at the pump have gone down from a high of $5.02 per gallon to just $4.26 per gallon on July 29th. One of the largest contributors to the decline in gas prices is that Americans are simply driving less and reducing spending, which caused many economists to raise concerns about a global recession. 

If gas prices are a major driver of inflation, shouldn’t prices for consumer goods be falling as well? While consumer price index numbers have not yet been released for July, the prices consumers pay for essentials do not seem to be budging; in fact, the Personal Consumption Expenditures Index — the Federal Reserve’s preferred inflation gauge, which measures consumer spending — increased 6.8% in June. This was the largest increase on the index since 1982 and could indicate that we are entering a period of “stagflation” like we saw after the 1970s oil crisis. The severity of the economic news released in July could spell disaster for anyone in or near retirement if their nest eggs are not protected. 

GDP and the Job Market

Gross Domestic Product measures the value of all goods and services produced in a country over a period of time. Conventional wisdom would suggest that low unemployment and increased prices would drive GDP numbers higher, but that has not been the case in the summer of 2022. Two years prior —during the height of the COVID-19 pandemic — unemployment was at 11%, its highest level since World War II. Since then, unemployment has gone down drastically to 3.6% as millions of Americans returned to the workforce. Although low unemployment would normally correspond with a booming economy, current GDP results are telling a different story.

In the first two quarters of 2022, GDP contracted by 1.6% and then decreased 0.9% in the second quarter. Two consecutive quarters of negative growth officially means that the United States economy is in a recession. Although this news has not caused widespread panic among Wall Street investors, this is largely a result of the federal government and the media’s manipulation of the word recession. While the media and federal officials deny the existence of a recession, hard-working Americans and those who are in or near retirement are already feeling the devastating financial effects. 

Interest Rates and Inflation

The Federal Reserve has taken steps to reduce inflation by tapering off its Quantitative Easing program and raising interest rates. While these measures have proven effective in the past — most notably after the 2008 financial crisis — in 2022 they have done little to prevent inflation from rising. After increasing interest rates by 75 basis points in June, the Fed hiked rates again by another 75 basis points in July, bringing the target range up to 2.75%. It is hard to predict whether these increases will have any effect on inflation, but if the past is any indication, investors are at risk of falling victim to a sharp selloff on the stock market indices.

Protecting Your Retirement Savings from an Uncertain Economy

At a time when the world’s top economists are having trouble making predictions for the future, the average retirement investor is at a tremendous disadvantage. While it is impossible to guess where the stock market will be a month from now it is more important now than ever before to secure your investments and protect your nest egg to avoid the risk of losing everything when the economy takes a turn for the worst. 

At Crash Proof Retirement, we have helped more than 5,000 consumers develop a secure retirement strategy using investment vehicles that exist outside of the risk-based securities industry. While traditional investments like stocks, bonds, and mutual funds quickly lose value during stock market crashes, the vehicles utilized by the proprietary Crash Proof Retirement System are guaranteed to protect your principal and past interest credited so you lose zero when the stock market turns negative. During periods of market turmoil, zero truly becomes the hero for Crash Proof Consumers. In addition, the exclusive Crash Proof Retirement vehicles credit interest at rates comparable to those of securities-based investments without any fees when the market recovers. 

Although the future of the U.S. economy may be uncertain, you can rest assured with peace of mind that your retirement is protected with Crash Proof Retirement. To speak with one of our licensed educators, call Crash Proof Retirement today at 1-800-722-9728 or fill out the online form on our contact page to schedule your complimentary financial checkup and get the right retirement advice in Upper Darby.

Share Post

Leave a Reply