Imber Wealth Advisors: coronavirus and economy

Showing posts with label coronavirus and economy. Show all posts

Wednesday, February 2, 2022

The U.S. is in the emergent stages of the omicron variant of the coronavirus. However, we now have some experience in what this could mean moving forward, both for the health and economic impact of the U.S. and our global neighbors.

To continue fighting COVID-19 without shutting down schools and businesses, the Biden Administration recently announced new guidelines to help contain the virus. The initiatives include free booster shots for all adults, new quarantine and testing policies in schools, vaccination or weekly testing requirements by businesses, free at-home COVID test kits, more resources allocated to areas with hotspot flare-ups, and greater global distribution of vaccines to help stop the spread.¹

Regardless of where individuals stand on the debate of mandated vaccines, it is important to recognize the long-term effects of the continued spread of the virus. The stock market had a strong negative reaction after the omicron variant was identified in the U.S. If the virus continues to spread, we will continue suffering these setbacks. For many, the pandemic is less a health issue than a financial one. If you are looking for ways to shore up your investment portfolio to weather the ongoing volatility presented by COVID-19, please give us a call.

The following are key economic questions associated with omicron — or any new variant that develops in the future: 1) What is our capacity to prevent and contain its spread;² 2) How susceptible is it to various demographics; and 3) How will it affect our current vaccination levels and waning immunity?³

A recent study of the phenomenon presents a variety of possible scenarios. One positive outcome of omicron is that it motivates more people — and countries — to higher vaccination levels. If the new variant proves more easily transmitted than the delta variant, we may need to step up masking and social distancing measures; even sending workers back to working from home. If the strain proves to be vaccine-resistant, more resources will need to be dedicated to modifying messenger RNA vaccines and getting them out to the public as quickly as possible.

What about rising inflation? Some economists believe higher prices are directly linked to global shortages and higher demand — which would abate if omicron constrained the economy again. However, if inflation is due to monetary and fiscal stimulus policies, prices could further increase regardless of the direction of the pandemic.⁴

Finally, since vaccine hesitancy appears to be emanating from a lack of trust in the government, the U.S. may be jeopardized by the threat of growing civil instability. This has the potential to land us in the same high-risk category of countries that experience ongoing civil unrest and attempts to overthrow the government.⁵

For America’s health, safety, economic prospects and our own financial portfolios, let’s hope the issues surrounding COVID-19 do not manifest in these ways.

Content prepared by Kara Stefan Communications.

¹The White House. Dec. 2, 2021. “President Biden Announces New Actions to Protect Americans Against the Delta and Omicron Variants as We Battle COVID-⁠19 this Winter.” https://www.whitehouse.gov/briefing-room/statements-releases/2021/12/02/fact-sheet-president-biden-announces-new-actions-to-protect-americans-against-the-delta-and-omicron-variants-as-we-battle-covid-19-this-winter/. Accessed Dec. 3, 2021.

²Andrew Sheets and Matthew Harrison. Morgan Stanley. Nov. 30, 2021. “Omicron Variant Causes Concern.” https://www.youtube.com/watch?v=8iJNYWeslf8. Accessed Dec. 3, 2021.

³Mick Costigan. World Economic Forum. Nov. 30, 2021. “The Omicron variant is here – what comes next? Here are 5 possibilities.” https://www.weforum.org/agenda/2021/11/omicron-whats-next-5-scenarios-to-help-business-leaders-make-the-right-decisions/. Accessed Dec. 3, 2021.

⁴Jeff Cox. CNBC. Nov. 27, 2021. “The current inflation run is similar to other episodes in history, but with important differences.” https://www.cnbc.com/2021/11/27/the-current-inflation-run-is-similar-to-other-episodes-in-us-history-but-with-important-differences.html. Accessed Dec. 3, 2021.

⁵Maneet Ahuja. Forbes. Nov. 29, 2021. “Ray Dalio Says America’s Decline Will Upend Lives, Not Just Portfolios.” https://www.forbes.com/sites/maneetahuja/2021/11/29/ray-dalio-says-americas-decline-will-upend-lives-not-just-portfolios-the-billionaire-investor-paints-a-dire-scenario-in-his-new-book/?sh=4961c9b3c4f0. Accessed Dec. 3, 2021.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

Monday, June 14, 2021

The Labor Market in the Post Pandemic Era

According to the most recent Future of Jobs Report by the World Economic Forum, 50% of employees will need new skills training by 2025 as the pace of technological innovation continues to grow. Among business leaders, 94% say they expect employees to learn new skills while on the job, compared to just 65% who made that claim in 2018.¹

However, the amount of time it takes to reskill will depend on the industry, according to the online learning platform Coursera. For example, only one or two months is necessary to acquire skills in emerging professions such as content writing, sales and marketing; in contrast, it could take up to three months to expand skills in product development, data and artificial intelligence. Skills needed for roles in cloud computing and engineering could take up to four months. Among soft skills that will increase in demand, critical thinking and problem-solving top the list. But post-pandemic, skills in resilience, stress tolerance and flexibility also are highly valued.²

This recognition of the need for new skills training opens up avenues for all types of people, even retirees and middle-aged professionals who would like to change careers. After all, the acquisition of skills based on new technologies means no one will have a huge edge in terms of experience. Therefore, people with the ability to learn technical skills quickly – who already possess high-value soft skills – have strong potential to vie for a new career. If you’re thinking about making such a move, we’d be happy to review your financial portfolio to help make sure you are on the right path toward your retirement.

Another labor trend is the rise of remote work and its impact on employees’ lifestyles. With the pandemic clearing the way for many white-collar workers to work remotely, younger workers have been able to move to more affordable locales and buy their first homes. On the other hand, established homeowners can now consider relocating to wherever they’d like to retire, trading in their current home equity for their retirement home – with a plan to pay off that final mortgage while they’re still working. This way, they can move and start enjoying a retirement lifestyle near the beach, lake or mountains while still gainfully employed, albeit working remotely.³

Unfortunately, low-skilled, blue-collar professions are on the other side of that coin. Many either lost jobs during the pandemic or were classified as high-risk “essential workers.” Just because grocery store clerks became essential, it doesn’t necessarily mean an increase in pay or benefits. While the debate over raising the national minimum wage continues in Washington, there’s little doubt that many low-paying jobs will always be necessary, but experienced workers in those positions are not necessarily low-skilled.⁴

For example, what is the value of caregivers who can skillfully attend to mobility-challenged people? Or workers who serve multiple tables of hungry and thirsty patrons who want their meal yesterday? Skills like patience and equanimity have not traditionally received the same level of pay as an office worker, but they are no less valued or necessary. It will be interesting to see, post-pandemic, if these types of jobs begin to translate into fair pay and good benefits.⁵

After decades of steady decline, labor unions are hoping for greater respect and participation moving forward – based on support by President Joe Biden’s administration. Today, only one in five households has a union member, and the Economic Policy Institute estimates the decline of unions translates to an average loss of $3,250 per year for a full-time worker. Biden is advocating passage of the Protecting the Right to Organize (PRO) bill, which would abolish state laws that ban mandatory collection of dues as a condition of employment, penalize businesses that retaliate among union drives and extend federal labor rights to independent contract workers. So far, the House has approved the legislation, but it faces a more difficult path in the Senate.⁶

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you!

¹ Kate Whiting. World Economic Forum. Oct. 21, 2020. “These are the top 10 job skills of tomorrow – and how long it takes to learn them.” https://www.weforum.org/agenda/2020/10/top-10-work-skills-of-tomorrow-how-long-it-takes-to-learn-them/. Accessed April 30, 2021.

² Ibid.

³ Liam Dillon. Los Angeles Times. April 30, 2021. “The remote work revolution is transforming, and unsettling, resort areas like Lake Tahoe.” https://www.latimes.com/homeless-housing/story/2021-04-30/covid-wfh-boosts-palm-springs-lake-tahoe-housing-markets. Accessed April 30, 2021.

⁴ Annie Lowrey. The Atlantic. April 23, 2021. “Low-Skill Workers Aren’t a Problem to Be Fixed.” https://www.theatlantic.com/ideas/archive/2021/04/theres-no-such-thing-as-a-low-skill-worker/618674/. Accessed April 30, 2021.

⁵ Ibid.

⁶ Steve Matthews and Payne Lubbers. Bloomberg. April 15, 2021. “Biden Confronts Decades of Union Decline in Bid to Boost Pay.” https://www.bloomberg.com/news/articles/2021-04-15/biden-confronts-decades-of-union-decline-in-bid-to-boost-wages?sref=wFA4tJCq. Accessed April 30, 2021.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.

Wednesday, June 9, 2021

Ranking the World's Nations

What’s the best country? After several years at No. 2, Canada leads the globe, according to U.S. News & World Report’s “Best Countries” rankings for 2021. It’s followed by Japan, Germany, Switzerland, Australia and the United States.¹

The criteria used to make Best Country determinations included quality of life, agility, entrepreneurship, an “open for business” climate, a strong job market and commitment to social justice and human rights. At No. 6, the United States received high marks in power and cultural influence, and scored highest in agility, which represents traits such as adaptability and responsiveness.²

Agility is an important trait for individuals and families, too, because it means you can pivot, adapt and respond to life’s challenges and move forward. Please call us if you’d like us to help make sure your financial picture remains agile no matter what challenges you may encounter.

Over the past year, the global perception of “best countries” has in many ways been shaped by responses to the pandemic. According to the Global Health Security Index, the U.S. has traditionally ranked highest in preparedness in terms of its ability to prevent, detect and respond to infectious disease threats. Unfortunately, that preparedness apparently wasn’t an advantage with COVID-19, as the U.S. ranked worst globally in terms of case numbers and deaths since the onset of the pandemic.³

Fortunately, the U.S. has picked up in more positive perceptions as it rolled out vaccinations this spring. In April, it advanced to No. 17 in Bloomberg’s Covid Resilience Ranking. Singapore, New Zealand and Australia top that list as the best places to live during the pandemic. By tracking recovery rates in the 53 major economies across the globe, the Bloomberg index is designed to help predict how they may grow in the future.⁴

For now, global travel remains tenuous. Countries still struggling with outbreaks and low vaccine rates are largely off limits, while countries doing well in these areas are restricting citizens from traveling places where they might return with a new strain of the virus. In April, the U.S. State Department updated its travel advisory guidelines, warning Americas not to travel to about 80% of the world.⁵

All in all, 2020 was not a great year anywhere on the globe. Even countries that had success containing the virus suffered economically due to lockdowns, while the opposite was true for economies that stayed open. Still, the World Economic Forum published its annual World Competitiveness Ranking in December 2020, albeit without country competitiveness rankings due to incomplete data. Based on the indicators of reviving and transforming the enabling environment, human capital, markets and the innovation ecosystem, the U.S. led in areas such as digital legal framework and new business creation.⁶

¹ Knowledge@Wharton. April 20, 2021. “Why Canada Took the Top Spot on This Year’s ‘Best Countries’ List.” https://knowledge.wharton.upenn.edu/article/canada-took-top-spot-on-this-years-best-countries-list/. Accessed April 26, 2021.

² Ibid.

³ National Center for Biotechnology Information. Oct. 7, 2020. “The Global Health Security Index is not predictive of coronavirus pandemic responses among Organization for Economic Cooperation and Development countries.” https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7540886/. Accessed April 26, 2021.

⁴ Jinshan Hong, Rachel Chang and Kevin Varley. Bloomberg. April 26, 2021. “The Best and Worst Places to Be as Variants Outrace Vaccinations.” https://www.bloomberg.com/graphics/covid-resilience-ranking/. Accessed April 26, 2021.

⁵ Kenneth Kiesnoski. U.S. News & World Report. April 24, 2021. “State Department has warned against travel to 80% of the world. Here’s what you need to know.” https://www.cnbc.com/2021/04/24/covid-80-percent-of-world-is-unsafe-for-travel-amid-pandemic-state-dept-warns.html. Accessed May 14, 2021.

⁶ Klaus Schwab and Saadia Zahidi. World Economic Forum. 2020. “The Global Competitiveness Report. Special Edition 2020.” http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2020.pdf. Accessed April 26, 2021.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions.

Thursday, May 13, 2021

What's Driving Oil Prices?

Oil prices are influenced by supply and demand, and 2020 was a great demonstration of this principle. With global and local shutdowns due to the spread of the coronavirus, there was less demand for products and services. While online shopping was up, foot traffic in stores languished and retailers – both local and nationwide – suffered from reduced consumerism.

With fewer customers, merchants needed less inventory. Wholesale orders dropped, as did the need to transport them from manufacturers to distributors to vendors. Reduced transportation led to less need for crude oil and gas. Thus, with decreased demand, gas prices dropped and stayed low.

Today, it’s a different story. Long-awaited vaccines have given retailers new hope for consumerism, so they are ordering increased inventory and deliveries are being made every day. Higher demand begets increased transportation, so oil prices are on the rise again. Lest we succumb to the impulse to complain about increased gas prices, remember that economic growth is a big contributor.¹

Furthermore, for the first time since the pandemic began, more people are starting to leave the nest, taking vacations or planning trips for this summer. In April, the Energy Information Administration (EIA) announced that highway traffic is up 1% from a year ago and jet fuel demand jumped to 1.358 million barrels as vaccinated travelers are starting to take advantage of lower-cost airfares and hotel discounts. ²

As the economy recovers, we can expect higher inflation with many commonplace expenses. If you’ve reduced spending in the past year, note that your household budget may necessarily increase in kind – and not simply because you’re indulging in pent-up demand. If you need to make adjustments to your savings rate or review your portfolio to help defend against the effects of inflation, please give us a call. Now is a good time to review and reset your goals and allocations.

The oil industry is a little different from typical consumer goods. Because it takes time to mine for oil and refine it for consumer use, there is a lag time that can influence prices. For example, today’s new high demand will take a few months to affect crude oil production. The IEA predicts that new orders won’t be accurately reflected in global oil demand and supply until the second half of 2021. Once production is ramped up to meet rising demand, prices may begin to drop again.³

As of mid-April, the U.S. had fully vaccinated about 22% of the population. The United Kingdom was at about 11%, with France and Germany at only 6% vaccinated according to the Reuters vaccine tracker. Vaccine rollouts have been much slower and infections continue to surge in places like Europe, India and some emerging markets. Note that global oil producers take into consideration that other economies are not recovering as quickly as the U.S. While this may make them less inclined to ramp up oil production too quickly, the U.S. shale oil industry has a direct market to serve, so production is scheduled to increase by about 13,000 barrels per day.⁴

Also note that it’s not that easy to stay solvent during a year-long pandemic, even in the oil industry. In North America alone, bankruptcies among oil producers increased to the highest first-quarter level since 2016.⁵

¹ US Energy Information Administration. 2021. “Oil and petroleum products explained.” https://www.eia.gov/energyexplained/oil-and-petroleum-products/prices-and-outlook.php. Accessed April 15, 2021.

² Phil Flynn. Futures Magazine. April 15, 2021. “An Increase In Travel Is Tightening Oil Supply In The U.S.” http://www.futuresmag.com/2021/04/15/increase-travel-tightening-oil-supply-us. Accessed April 15, 2021.

³ Gina Lee. Investing.com. April 15, 2021. “Oil Down as Investors Digest Latest Supply Forecasts, U.S. Crude Oil Supply Draw.” https://www.investing.com/news/commodities-news/oil-down-as-investors-digest-latest-supply-forecasts-us-crude-oil-supply-draw-2474995. Accessed April 15, 2021.

⁴ Aaron Sheldrick, Bozorgmehr Sharafedin and Stephanie Kelly. Reuters. April 12, 2021. “Oil rises on U.S. vaccine rollout, Middle East tension.” https://www.reuters.com/business/energy/oil-prices-climb-favourable-outlook-us-fuel-demand-2021-04-12/. Accessed April 15, 2021.

⁵ Liz Hampton. Reuters. April 15, 2021. “North American oil bankruptcies hit highest Q1 level since 2016.” https://www.reuters.com/business/energy/north-american-oil-bankruptcies-hit-highest-q1-level-since-2016-haynes-boone-2021-04-15/. Accessed April 15, 2021.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Monday, March 29, 2021

Can Money Buy Happiness

In 2010, a study was published by two Nobel prize-winning economists purporting that people with more money feel better about their lives. However, that held true only up to an annual salary of $75,000 ($90,000 in today’s dollars). Past the $75k threshold, people weren’t necessarily any happier.

That scenario has apparently changed in the ensuing decade. A recently updated version of the study now concludes that happiness continues to increase with income – without a cap.1

How do you define happy? The way we quantify happiness during our working years may be different from retirement. That’s largely because some of us define ourselves by our work or career status – how much we earn and whether we’ve reached our professional goals. Once we retire, the focus is put less on these things – our happiness can be shifted towards other things.

It may be family, travel, improving our golf or tennis game, pursuing hobbies, or checking off that bucket list. When we are in the retirement planning stage, it’s important to think about what will make you happy in retirement. From there, you can establish a number – your total assets – that support those concrete goals. That’s different from coming up with a random number and then living whatever lifestyle you can with it. If you’d like to discuss your retirement goals in more depth, feel free to contact us.

The 2020 World Happiness Report promises to be an interesting read because it’s the first in which data was collected during a global pandemic. While you would think the responses would be dreary, there are some positive patterns to consider. Across 12 countries, people affected by lockdowns developed stronger relationships with friends, neighbors and even the front-line workers at their local stores. In fact, 62% reported that living under a lockdown made them feel more connected to their community. More than half (58%) determined that those human connections are what make them truly happy.2

If you speak with retirees from earlier generations, there has long been a common theme that the important factor affecting a happy retirement is health – not wealth. More than 80% of today’s retirees agree. According to a recent Merrill Lynch study, regardless of wealth, Americans age 50 and older say that their biggest worry in preparing for retirement is being able pay for health-care expenses.3

Everyone’s ideal retirement is different. Your actual plans are what can change the goalposts for “the number” you need to have saved by retirement. While traditional retirement advice recommends we save anywhere from 10 to 15% of current income for retirement, you may be able to save less – or need to save more – to achieve the specific lifestyle you want in retirement. In other words, budget for the lifestyle you plan to enjoy, not the income that you presently earn.4

It’s one thing to scale your annual retirement income to your lifestyle – but what about the big-ticket risks? The Society of Actuaries (SOA) has identified a number of post-retirement risks that can affect income, such as the need for long-term or nursing care.5 By unbundling the income and insurance elements of your plan, you may be better able to afford the retirement lifestyle that will make you happy.6

1 Alex Ledsom. Forbes. Feb. 7, 2021. “New Study Shows That More Money Buys More Happiness, Even For The Rich.” https://www.forbes.com/sites/alexledsom/2021/02/07/new-study-shows-that-more-money-buys-more-happiness/?sh=561c2ff770d5. Accessed March 1, 2021.

2 World Happiness Report. Feb. 24, 2021. “Let’s Build Back Happier!” https://worldhappiness.report/blog/lets-build-back-happier/. Accessed March 1, 2021.

3 Kathleen Coxwell. New Retirement. Jan. 9, 2020. “65 Retirement Tips for a Healthy, Wealthy and Happy Retirement!” https://www.newretirement.com/retirement/retirement-tips-healthy-wealthy-happy-retirement/. Accessed March 1, 2021.

4 Paula Pant. The Balance. Feb. 11, 2021. “Plan for Retirement Based on Lifestyle, Not Current Income.” https://www.thebalance.com/plan-for-retirement-based-on-lifestyle-not-current-income-453919. Accessed March 1, 2021.

5 Ken Hawkins. Investopedia. Jan. 4, 2021. “Common Post-Retirement Risks You Should Know.” https://www.investopedia.com/articles/retirement/08/post-retirement-risks-outlive-assets.asp. Accessed March 1, 2021.

6 Jerry Golden. Kiplinger. Nov. 4, 2020. “Find the Income to Insure Against Retirement Risks.” https://www.kiplinger.com/retirement/601671/find-the-income-to-insure-against-retirement-risks. Accessed March 1, 2021.

Thursday, March 18, 2021

Shopping for Life Insurance During the Pandemic

It may come as no surprise to learn that there was a jump in life insurance applications during 2020.1 While contemplating one’s demise may feel like something you can delay when healthy, financial planning clearly weighed heavily on the minds of Americans during the current deadly pandemic.

Rest assured that for anyone who already owns a life insurance policy and then passes away due to a COVID-related condition, their beneficiaries will receive the death benefit (as long as premium payments are current). Once you purchase a life insurance contract, the terms are set and cannot be changed after purchase.

However, if you’re considering applying for life insurance while the pandemic is still ongoing, you can expect a few challenges. Because the coronavirus has had a high fatality rate among people age 65 and older, some insurers have temporary limited the age for which they will issue a new policy. Some won’t issue policies after age 70; others have cut the age limit to 60.2

If you have traveled out of the country recently, particularly if you’ve been to a country with a substantial outbreak, the insurer may require a quarantine period before considering your application. The same goes for if you are currently infected with the virus; you’ll have to wait until you are fully recovered to apply for life insurance.

Traditionally, life insurers generally required a physical exam as part of the application process to ensure the candidate wasn’t facing imminent death when he or she applied for a policy. However, because of today’s social distancing guidelines, many insurers have delayed that requirement — relying solely on a medical questionnaire. Those questionnaires will very likely ask if you have been treated for COVID-19.3

Even pre-existing health conditions such as diabetes and asthma, which are high-risk factors for serious COVID-19 cases, may be heavily weighted when determining your policy premium. While medical underwriting is no longer permitted to determine health insurance terms and rates, it is baked into the life insurance application process and can affect individual premiums.

In fact, in upcoming years, as insurers amass and evaluate medical data related to the coronavirus, they are apt to adjust policy terms and rates, particularly in anticipation of subsequent medical conditions suffered by COVID-19 survivors. This is perhaps reason enough to go ahead and apply for life insurance now — assuming you are relatively young and healthy — before those factors become an issue.

Finally, if you’ve lost your job and are worried about being able to keep up with life insurance payments, call your insurer about alternative payment options. Considering today’s high unemployment rate, some carriers are offering to defer premiums for up to 90 days.4

1 Megan Leonhardt. CNBC. Sept. 1, 2020. “Applications for life insurance are on the rise—here’s what you should know before you buy.” https://www.cnbc.com/2020/09/01/what-to-know-about-buying-life-insurance-during-the-covid-19-pandemic.html. Accessed Feb. 23, 2021.

2 Cynthia Paez Bowman. Bankrate. Oct. 29, 2020. “Can you get a life insurance policy during COVID-19?” https://www.bankrate.com/insurance/life-insurance/coronavirus-and-life-insurance/. Accessed Feb. 23, 2021.

3 Sterling Price. ValuePenguin. Jan. 15, 2021. “How Is the Coronavirus (COVID-19) Affecting Life Insurance? An FAQ.” https://www.valuepenguin.com/life-insurance-coronavirus-faq. Accessed Feb. 23, 2021.

4 Ibid.