The Federal Reserve has a dual mandate—manage inflation and maximize employment. But sometimes, those economic goals conflict with each other.
As you can see in the accompanying chart, labor shortages in 2022 pressured businesses to lift wages, which, in turn, put more money in people’s pockets. More money leads to more spending, which can produce inflation. So from the Fed's perspective, employment improved last year, but inflation worsened.
But 2023 is telling a different story. Median wage growth is heading lower while inflation is dropping, which is precisely what Fed Chair Jerome Powell wants to see as he evaluates what’s next for short-term interest rates.
"I would say it’s certainly possible that we will raise funds again at the September meeting if the data warranted,” said Powell after the Fed’s July meeting. "And I would also say it’s possible that we would choose to hold steady, and we’re going to be making careful assessments, as I said, meeting by meeting."1
With wages lower and consumer prices trending down, we’re closer to the end of the rate-hike cycle than in the beginning. So stay tuned! The next Fed meeting is in September, but Federal Reserve officials will be making several speeches during the next few weeks.
1. CNBC.com, July 26, 2023. “Fed approves hike that takes interest rates to highest level in more than 22 years.”
- Heartfelt congratulations go out to our Managing Director of Operations, Arianna Lemonias, who married her high school sweetheart, Austin, on July 16th. The CRF team is honored to have been present to celebrate their beautiful wedding. Please join us in wishing them a lifetime of love and happiness.
- Did you know? The AccountView user interface has a new modern design and updated navigation as of July 15th. For more detailed information please review the Navigation Update Before & After Guide. To access your Account View, please visit ConcordRiverFinancial.com and select "Account Login" from the top menu.
- LPL Research's Midyear Outlook 2023: The Path Toward Stability is now available, offering insightful commentary and economic and market guidance through 2023.
Tax Tips For Side Gigs
There are some important tips to remember if you work a side gig:
- All income from these sources is taxable, including both full-time and part-time work and any cash payment received.
- As a gig worker, correctly classify yourself as an employee or an independent contractor; this can depend on where you live, even for the same services.
- Lastly, it's important to consider paying quarterly taxes during the year to help avoid any federal or state tax penalties for underpayment.
*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov
What is the longest word in English to have only one vowel repeated? (Hint: It has 18 total letters, and the vowel repeats four times.)
Last Month's Riddle: What 8-letter word remains an English word each time you remove a letter from it until it becomes a one letter word?
Answer: The word is starting! starting, staring, string, sting, sing, sin, in, I.