Small wins in the Economy
I've got three small wins for you this week.
When it seems like there's a flood of bad news and everything is unpredictable, I think it's important to highlight the bright spots when we see them.
I'll button things up for you at the end (and share something fascinating to look forward to this month).
Small Win #1: The economy bounced back in Q3
U.S. economic growth made a comeback last quarter – the economy grew 2.6% after shrinking in the first half of 2022. That's good news because it means we're not in a recession (yet).
But, there are a couple of caveats we should pay attention to:
This data is only a first estimate. It'll be revised twice more before it's final.
A recession is still more likely than not, with an uncertain growth picture for 2023.
Small Win #2: The Social Security Administration announced the biggest cost-of-living adjustment (COLA) in four decades
Because of this year's red-hot inflation, Social Security beneficiaries will see a COLA of 8.7% in 2023.
On top of the (tiny) drop in 2023 Medicare Part B premiums, this is good news for the retirees (and low-income kids and families) who have seen inflation take a big bite out of their income.
However, some folks are concerned about the impact of higher lifetime benefits on Social Security's future solvency.
Small Win #3: The stock market closed out its best month in decades
After weeks of volatility and selling pressure, stocks had a banner month in October, with the Dow marking its best month since 1976 and its best October ever.
These types of rallies are common in a bear market and are a potent reminder of why selling during a downturn is generally a bad idea.
Is the bear market over? Is the bottom behind us?
There's no way to know for sure, but it's not likely. The Federal Reserve decision to hike interest rates 0.75% is likely to weigh further on markets, though there’s some indication they may consider slowing the pace of hikes in the future.
So, let's stay flexible and remember that those good and bad market days often cluster.
Bottom line: The overall market and economic picture looks as uncertain and hazy as ever. But there are good weeks (and months) and small wins along the way. Let's take a moment to appreciate them.
P.S. The IRS released higher-than-expected income tax thresholds, deductions, and contribution limits for 2023. The standard deduction increased to $13,850 for individuals and $27,700 for joint filers.
The amount you can contribute to most workplace retirement plans will be $22,500, while annual contributions to an IRA increased to $6,500 for folks under 50.
Want to talk about your tax picture before the end of 2022? Send me an email and let me know.