Disclaimer: Good Day, Readers. WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.
U.S. ECONOMY – WOBBLING LIKE A GAME OF JENGA
The U.S. economy is like a high-stakes game of Jenga. While the FED is the maestro of the game, they do NOT control all the blocks! The nation’s economic stability relies on a delicate balance of various factors represented by individual Jenga blocks. Each reflects the diverse and interconnected aspects of our economy.
A FEW BLOCK LABELS
When the tower collapses, so does our economy. Let’s look at how these blocks interact in the complex U.S. economy.
- INFLATION: When prices of goods and services rise uncontrollably, it erodes the purchasing power of consumers, impacting their ability to spend and invest.
- POLITICIANS WITH LITTLE ECONOMIC/FINANCIAL LITERACY: While the FED is trying to orchestrate a “soft landing,” our politicians pump Trillions of dollars into the economy and increase inflation.
- FED RATES: The Federal Reserve, {The Fed} can be seen as the architect of the Jenga tower. When the Fed raises interest rates, it tightens the availability of credit, which can have a domino effect on borrowing, spending, jobs, and investment.
- INTEREST RATES: The housing market plays a significant role in the U.S. economy, and higher interest rates can deter potential homeowners from making purchases, affecting the real estate sector.
- CREDIT: Credit card interest rates and defaults have increased. When consumers have high levels of credit card debt, it can limit their ability to spend on other goods and services.
- HOME SALES: Mortgage rates increased from 2.7% to ~8.0 percent, and we see a decrease in the demand for homes. Negatively impacting the construction sector, leading to fewer jobs and economic instability.
- CONSTRUCTION JOBS: Like many other sectors, construction jobs depend on a steady demand flow. A decrease in construction results in job losses.
- CAR SALES: As car loan interest rates increase coupled with greater increases in vehicle prices, we see a decline in car sales across the entire automotive industry, impacting manufacturers and suppliers.
- CANCELED EXPLANSION PLANS: Tesla, General Motors, heck, all the U.S. car companies recently announced their Electric Vehicle pipedreams have cracked. Car company’s and manufacturers” decisions to cancel expansion plans and new jobs impact employment, capital investment, and economic growth.
- WAR: Global geopolitical events, like the Ukraine, Russia, and Israel conflict, can lead to market uncertainty and affect trade and international relations.
- OIL PRICES: Oil prices significantly impact sectors from transportation to manufacturing. Price fluctuations can disrupt economic stability.
- FUEL PRICES: High gas prices can directly affect consumers’ budgets, as they spend more on transportation, leaving less money for other expenditures.
The Tower’s Collapse: Recession
Ring-a-ring-a-rosies; A pocket full of posies; A tissue, a tissue; We all fall down
The Federal Reserve and, unfortunately, politicians have their hands all over the U.S. economy. And like a good Jenga game, the keyword is WHEN, not if, the tower collapses.
WHEN the economy finally collapses, it represents a recession – a period of economic decline characterized by reduced consumer spending, business contraction, and rising unemployment. The U.S. experiences a recession about every five years.
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St Jude Hospital: The mission of St. Jude Children’s Research Hospital is to advance cures, and means of prevention, for pediatric catastrophic diseases through research and treatment. Consistent with the vision of our founder Danny Thomas, no child is denied treatment based on race, religion or a family’s ability to pay.https://www.stjude.org/
Wounded Warrior Project: An American charity and veterans service organization that offers a variety of programs, services and events for wounded veterans of the military https://www.woundedwarriorproject.org
Folds of Honor: Providing life-changing scholarships to the spouses and children of America’s fallen or disabled military. And now, our mission expands to the families of America’s first responders. On our watch, those who protect our freedoms and our families will know they are not forgotten. https://foldsofhonor.org
Wilson’s No-Kill Animal Shelter: A N0-Kill shelter that is a top-rated non-profit. They compassionatelycare for all their animals. https://wcnkas.org
Tunnel To Towers: Since 9/11, we have been helping America’s heroes by providing mortgage-free homes to Gold Star and fallen first responder families with young children and by building specially-adapted smart homes for catastrophically injured veterans and first responders. We are also committed to eradicating veteran homelessness and helping America to Never Forget September 11, 2001. https://dogood.t2t.org/give/320847/#!/donation/checkout
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an NC. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, and real estate and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation. As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.