Another year is in the books! And it was a big one for Money Vehicle — and likely for you, too!
Here’s a short round-up of some of the most significant and impactful happenings of the year, and specifically, the ones that likely had an impact on your finances. Remember: You never know what’s going to happen (who saw a pandemic coming a few years ago?), so do your best to stick to your financial plan, live within your means and budget, and try not to get too rattled by the news cycle.
Inflation was the financial news story of the year. Prices went way up this year for various reasons — though most of it goes back to the pandemic. We saw prices increase significantly for everything from cars and trucks to food and gasoline. Almost nothing was spared. As a result, government regulators took action, and we’ll have to see what happens next.
The good news is that the more recent government figures indicate that inflation is slowing down, but we’ll likely be living with the effects of big price increases for years to come. Also, read more about how to fight inflation if you’re struggling to stick to your budget!
Shortages are tightly interwoven with inflation, as our markets and prices are largely driven by supply and demand. If you noticed shortages for certain goods or services this year, this likely drove prices up. Examples include, but are not limited to, gasoline (diesel, specifically), certain medicines, and even labor.
That’s right: Businesses are having a hard time finding enough workers, and that’s driving average wages up. That’s a good thing, generally, but it also means that prices rise, too.
Rising Interest Rates
With shortages and inflation dominating headlines, the Federal Reserve was forced into action this year and started raising interest rates. The theory is this: By making it more expensive for businesses and individuals to borrow money, fewer people will be willing to spend — thus driving down demand, and increasing supply. As a result, prices should stop rising.
This is a somewhat painful process, of course, and could result in a recession. But it’s the most effective tool the Fed has to fight inflation. And since the beginning of the year, the Fed has implemented several relatively big rate hikes which appear, as of the end of 2022, to be having an effect.
What’s Ahead in 2023?
Nobody knows what the future holds. Keep that in mind. But many are expecting the Fed’s actions to slow the economy, and possibly bring on a recession. That may or may not happen, so we’ll just need to see. Further, the long-lasting effects of the pandemic should continue to phase out as global supply chains catch up, too.
But again: Nobody knows for sure!
The best thing you can do? STICK TO YOUR FINANCIAL PLAN!
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