Every day, it seems, brings more negative news about the economy and the situation of the average American family’s finances. Americans are stuck between a rock and a hard place as the Fed continues to tighten monetary policy despite persistently high inflation. The upcoming recession may make 2008 seem like a picnic in comparison.
So it’s not surprising that more and more people in the United States are adopting measures to improve their financial stability. Those who value the security of their savings are among those eager to acquire gold. They’re anticipating bad things, and they’re not happy about it.
Consumer spending is a major contributor to the U.S. economy, and it has been showing signs of slowing recently. As customers remain indoors and avoid spending money, stores are sitting on huge amounts of unsold stock. More and more Americans anticipate having to live frugally in order to make ends meet, leading to a decline in households’ spending expectations.
This is bad news for homes as well as enterprises, and the next several months may prove to be difficult.
Decreases in Real Income
Real disposable income growth is negative, which is one reason why household spending is falling.
When adjusted for inflation, the average American is seeing a decline in their purchasing power year over year, making it harder and harder to maintain their current quality of life.
U.S. citizens are buckling down whether we like it or not, and it’s going to take more than a few stimulus cheques to get them spending again.
Although it is commonly assumed that the housing market won’t crash as it did in 2008, this is far from guaranteed. The current market contraction is the worst in almost ten years.
With mortgage rates being at their highest point since far before 2008, fewer people are applying for mortgages. Many American households are seeing their wealth erode as a result of the recent decline in housing prices.
The housing market is likely to tighten, and prices are at their highest levels in decades. Many people in the United States who had intended to buy a home soon are now delaying their plans.
The Cost of Rent Is Out of Our Budget
Because of this, a growing number of Americans are forced to resort to renting. Additionally, the rent is going up as well. Some estimates place the increase in rental costs caused by the epidemic at 30%. A significant portion of people’s income would be eaten up by a rent rise of that magnitude.
Younger Americans are finding it harder to save for a home, put away money for retirement, and reach other financial milestones that their parents and grandparents took for granted. With the property market suddenly turning upside down and prices soaring, the already grim financial future for millennials became much more so.
It’s Possible That the Job Market Will Explode
Even worse, the Biden administration is actively working to destabilize the gig economy. It has been independent contractors who have contributed to the rapid expansion of companies like Uber, DoorDash, Amazon, and many more. However, the Biden administration has been discussing a potential regulation change that would reclassify more of these freelancers as regular workers.
Many expanding businesses’ plans would have to be scrapped if that regulation went into place, leading to higher costs for everyone. It’s only natural that these fees would be passed on to customers, which might lead to a reduction in spending and further damage the bottom lines of these businesses.
Much of the new employment produced by the gig economy might vanish entirely if things go badly. With millions of Americans perhaps losing access to the temporary or part-time work to which they have become accustomed, the labor market’s apparent resilience in the face of recession might ultimately crumble.
IMF vs. Biden
In spite of this, in President Biden’s opinion, the likelihood of a recession is low. This is, of course, something he would say with the election only a week away. It’s hard not to wonder if he’s doing more harm than good to his image by denying the obvious to people who are already suffering from inflation and who stand to suffer far more when recession arrives, given the current state of the economy.
In contrast, the International Monetary Fund (IMF) has backed central banks’ attempts to combat inflation and warned that fiscal policy shouldn’t meddle by adding to already unsustainable levels of government borrowing and expenditure.
However, governments desire to spend money, making it necessary for central banks to reduce their spending. Toss the fight against inflation in the trash if central banks cave in and start buying government debt.
The financial and economic situation is worsening no matter how you cut it. Everyone from governments to businesses to families is experiencing the effects of rising interest rates and debt. There is a lot of confusion as individuals attempt to figure out how to make ends meet in the face of the greatest inflation rate in 40 years.
How to Fight Inflation and Keep Your Money
Investing in gold and silver has long been seen as a way to hedge against inflation. For millennia, investors have used these precious metals as protection against inflation and currency devaluation.
Gold and silver both grew at yearly rates of over 30% throughout the 1970s, the last time the United States had persistent high inflation. Since Paul Volcker ended that inflation in the early 1980s, however, Americans have gotten complacent. Most living Americans have no idea how gold and silver fared during stagflation.
The demand for gold and silver has risen because many people still recall how well they fared during the 2008 financial crisis. Physical gold and silver coin supplies are limited, driving increasing prices. But you should still attempt to save your money in precious metals like gold and silver today.
One common way to invest in gold is through a gold IRA, which allows you to convert your retirement savings into bullion without incurring any taxes or penalties. Then, just as with any other IRA, the growth of your gold and silver holdings is exempt from taxes until you withdraw the money.
If you’re concerned about your financial security and worry that inflation or a recession may erode the savings you’ve worked so hard to build, you may want to consider purchasing gold or silver as a hedge. If you’re interested in learning more about your precious metals investment possibilities, we recommend that you contact the professionals at Goldco right now.