Listen to the Audio Podcast here: (3:55 min)
As we enter the month of May, many Americans are starting to feel as though the economy is on it’s way to recovery. After all, corporate earnings have gone up and so has the stock market. The consumer has shown some interest in returning to their old spending habits which could help the economy of the good ol’ USA.
Yet, there is still concern that this summer the American public will see higher gasoline prices, especially if hurricanes hit offshore drilling rigs or tension heats up in the the Mideast. Pay $3.00 a gallon for gasoline and you have less money in your pocket. The less money in your pocket, the less you eat out or the less you spend to travel. When you don’t spend money, companies don’t make money and the economy slows down. It’s that simple.
Interest rates could still go up because they are currently so low. Yet, even with a slight increase in rates, adjustable rate mortgages could go up in their payments… once again, another example of less money in the American public’s pockets.
The threat of tax hikes continue to approach rapidly not only in personal income rates, but in other areas as well. When taxes go up, there’s less money in the American public’s pockets one more time.
All these increases could lead to deflation. You could see salaries cut and prices slashed due to deflationary events happening in our economy. Because there is less money to spend, there is fear that as the economy slows, things could get worse.
You should keep a close watch on these three topics; taxes, gasoline, and interest rates, all of which could cause us to rethink our lifestyles and take the momentum out of this economic recovery.
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