Financial markers you can be grateful for in this uncertain year

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Americans enter this holiday season in a generally decent financial position. That’s not quite the case, with rising inflation, labor shortages, container ship bottlenecks and other stresses.

But the landscape is good and even improving in many ways – some obvious, as economic expansion continues, and others more subtle. Here are some of the financial and investing markers that benefit a lot or most people.

Acknowledgments for banking applications

When was the last time you worried about your bank’s website or other mobile features? Probably not for a long time. If a recent survey of 2,200 people from the American Bankers Association is correct, 99% of consumers rate their bank’s online or mobile applications as excellent, very good or good. It’s a rare reminder that almost all Americans can agree on something.

In addition, four in five survey respondents agreed that innovation and technological advancements in the banking sector have helped improve access to financial services. And more than half, 54%, said they had used more contactless payment services since the start of the pandemic. These services include credit and debit cards as well as telephone or mobile applications such as PayPal, Cash App, Venmo and Zelle.

“Consumers appreciate the convenience, speed and security of digital banking services, and they will likely continue to use these channels even after the pandemic is over,” said Robert Morgan, senior vice president of innovation strategy at over there.

Sigh of relief for the health of the banks too

Another reason to thank financially reflects the health of the banking system. Anyone wondering can think of the Great Recession, which was exacerbated and prolonged by intense stress centered on financial and real estate companies.

Today, despite low interest rates making loans less profitable, banks are flourishing. In the last quarterly report released by the Federal Deposit Insurance Corp., the banks made a total of $ 70.4 billion, the second-highest profit total on record. More importantly for consumers, nearly 96% of banks are profitable and none went bankrupt in the last quarter.

The FDIC cites only 51 of the nearly 5,000 banks it oversees as having significant financial problems. This is down from the 813 problem banks a decade earlier.

Credit unions display similar healthy trends, and the percentage of Americans outside the traditional financial system – those considered unbanked or underbanked – has declined for most of the past decade.

Appreciate a stable stock market

The stock market rebound, despite the pandemic and all the disruptions of the past year, is a happy development. Granted, not all Americans have a stake in the market, but increasing levels of wealth have helped keep the economic recovery on track while improving retirement readiness and helping investors reach d ‘other financial goals. The current climate is sure to beat a sharp decline in bears.

Since the pandemic low of March 2020, the overall market as measured by the Wilshire 5000 Index is up approximately 115%.

The rally also happened with little anxiety, with no dip or correction of 10% or more. With the more difficult late summer / early fall months now over and the outlook for corporate earnings still strong, the odds are favorable for the momentum to continue.

Unlike real estate, where high home values ​​have come at the cost of many young adults and other potential buyers, there are no such barriers to entry into the stock market. Widely diversified mutual funds and exchange-traded funds can be purchased for a few thousand dollars or even less, and 401 (k) workplace plans often offer matching fund grants to encourage participation.

Recognizing that the rates are still low

While higher house prices have made housing less affordable in many parts of the country, you can’t blame interest rates, which have generally remained low despite continued economic expansion, falling unemployment and falling. rising inflation. The 10-year Treasury bill, to which fixed mortgages are typically pegged, is currently earning around 1.6% – almost exactly where it was six months ago.

The average 30-year mortgage in mid-November was hovering around 3%, below the level at the start of the year, according to the Federal Reserve Bank of St. Louis.

Meanwhile, consumers have generally improved their finances and reduced their credit card balances and other unpaid debts, aided by low rates and other factors. Defaults and bankruptcies have decreased significantly from previous years and credit scores have improved.

All of this could collapse if inflation continues to worsen and stimulus payments end, extended unemployment benefits are a thing of the past, and rent evictions and other moratoriums end. But so far the trends are favorable.

A nod to the resilience of Social Security

It may seem strange to include the Social Security retirement system as something to be thankful for. After all, each year draws the date of the exhaustion of the system’s trust funds closer, and Congress has shown no serious determination to do anything about it.

Yet Social Security continues to pay benefits as promised. And even if the trust fund depletion date arrives around 2035 as planned without any improvement, the system will not go bankrupt. It will continue to pay benefits based on payroll taxes and other tax revenue at that time, probably equal to around 75% of the promised payments.

A study by the Center for Retirement Research at Boston College found that media headlines about trust fund depletion can fuel misperceptions about the viability of the system and lead people to make bad choices. In a poll, 40% of those polled said they expected to receive nothing.

In the study, workers who read articles with more alarming headlines said they felt inclined to start claiming benefits earlier than those who saw more measured headlines. An early claim can be detrimental if beneficiaries end up locking in lower monthly payments for the rest of their lives.

“While the (alarming) headlines do their job to grab the attention of readers, they do not reflect the fact that payroll taxes paid by employers and employees will continue to flow,” the center said.

Still, the center urged Congress to consolidate the system – and as soon as possible.

Contact the reporter at russ.wiles@arizonarepublic.com.

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