Last week the Federal Reserve Board met and raised interest rates a half of a percent, as expected. The markets reacted with a wild rally, which was then completely wiped out on Thursday. Friday continued the slide and the market was down for the week.
Good news from the Fed is that Chairman Powell ruled out sharp increases of 0.75% or more, and indicated more gradual increases of one-quarter to one-half of a percent will be likely at each of the remaining meetings this year. The Fed’s current goal is to have interest rates at a neutral position, meaning they neither encourage nor discourage economic investment and purchasing. Achieving this will bring the economy to a so-called “soft landing”, where excessive inflation is lowered closer to the Fed’s long-term goal of 2%.
We also saw good news on the jobs front, with 428,000 new jobs in April, greater than the 400,000 expected. We’re also seeing continued job changes, as 4.5 million people quit their jobs in March, and 6.7 million started new jobs. The number of openings reported per job seeker is still about 2 to 1, which is forcing wages up as employers compete for workers.
And that’s all interesting data, but what does it mean for the average person trying to save for retirement? In reality, it means very little. A well-diversified portfolio and ongoing, regular contributions are your best ways to manage volatility and uncertainty. Given rising rates, pay down variable rate loans like credit cards and some lines of credit.
Your action item for the week is to check and see if you’ve filed for your Homestead Tax Credit. This is a Maryland state program that limits the rate of increase on your property taxes.
You can always find more information on our Facebook page, or our website at covingtonalsina.com.
Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, contact the appropriate qualified professional prior to making a decision.
 “Stocks Fall in Volatile Trading, Extending Thursday’s Sell-Off” Jessica Pound and Hannah Miao, CNBC
 US Bureau of Labor Statistics March 2022 Quits Report
 “In more ways than one, Fed's Powell showed his strategy this week” Howard Schneider, Reuters