The speed of change has accelerated rapidly, driving up the cost of failing to update a personal financial plan. The pandemic has spawned federal payments to Americans at a level never seen before. While the future remains clouded by the pandemic, Americans are amassing an unprecedented mountain of cash.
Here’s a new snapshot of the unprecedented change in disposable income and savings, according to the latest data from the U. S. Bureau of Economic Analysis.
While the chart only goes back to 1997, the two surges in the last year in these two enormously consequential factors driving growth of the economy are without precedent in modern U.S. history.
The two surges resulted from Covid relief cash payments made by the government in April and May 2020 and again in January 2021. That 2020 cash accumulated in savings accounts and was being spent down when January Covid aid payments hit.
Now, a new round of aid payments is almost certainly ahead. A $1.9 trillion aid and stimulus package is being negotiated in Congress and is expected to be signed into law by March 14.
In this time of accelerating change in the economy, financial assets are being revalued. The relative value of stocks versus bonds changed.
Meanwhile, taxes are about to be hiked by another new Covid aid legislation package, the American Rescue Plan, which is expected to be adopted by the end of 2021, after the economy has recovered.
When the pace of change in the world was slower, the cost of not having a strategic financial plan was not so dear. This is not the time to sit on your hands. This is the time to act.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person.Â Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences.Â You should consult the appropriate financial professional regarding your specific circumstances.
The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions.
This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.