SOMETIME BETWEEN THE APPETIZERS AND THE PIE, even families who avoid third-rail topics like politics are bound to talk about money—where the economy is headed and what it means for their plans. “Economics is for everyone,” says Michelle Meyer, Head of U.S. Economics for BofA Global Research. “People want to know about the job outlook, what low interest rates might mean for them, and where prices are going.” Meyer, for one, is heading into the holidays with insights to offer her family members. Below, she’s happy to share them with you so that you can be the economic guru of your own family gathering when questions like these arise.
Your niece is itching for a new job opportunity. Is now the time to make the move?
“All signs point to continued growth in the job market,” Meyer says. The U.S. unemployment rate hit 3.5% in November—the lowest level in 50 years.1 Jobless claims are at historic lows and there are 1.2 job openings for every seeker.2 “Considering that wages for job switchers are rising 1 percentage point higher than for stayers,3 if your niece is set on making a change, now may be the time.”
"All signs point to continued growth in the job market. If your niece is set on making a change, now may be the time."—Michelle Meyer, Head of U.S. Economics for BofA Global Research
Your parents just retired. How will low interest rates affect their savings?
Rates on savings accounts are tied closely to government bonds—and those fell during 2019. “We expect the Fed to stay on hold, keeping rates hovering at current levels,” Meyer says. While that’s disappointing for those looking for savings income, persistent low rates could make this a good time to fulfill other goals. For example, low borrowing costs could make this a good time for your parents to sell their existing home and move into the retirement house they’ve dreamed of.
Is your friend right that U.S.-China trade tensions could make your smartphone more expensive?
“So far, the trade tensions haven’t directly affected most consumer goods,” Meyer says. But he’s right to be concerned. Tariffs have hurt industries such as manufacturing, and disputes over national security, Hong Kong and the race for technological supremacy will continue. Look for a “ceasefire” at least through the U.S presidential election but without a final resolution.
Your sister asks: I’m working hard to pay off my home and education loans—why is it okay for the government to keep piling up debt?
If she’s like most U.S. consumers, your sister has been careful and responsible with money. “Household balance sheets are in good shape and consumers have largely spent within their means during this recovery,” Meyer says. Businesses, too, have moderated spending in recent years. Meanwhile, government borrowing is at the highest levels since the postwar 1950s.4 “This could create economic headwinds down the road.” While paying off life’s debts is never easy, credit your sister with setting a good example.
Someone had to ask: How will the election affect the economy?
Okay, we promised not to talk about politics. But without picking
winners, it’s important to recognize that elections do cause market
volatility. Businesses may delay new investments while awaiting
results, Meyer notes. Congressional gridlock could prevent legislation
from getting through. Despite other positive economic signs for 2020,
“the election remains a source of uncertainty.”
For all of her insights, Meyer concedes there are some family holiday debates where she can’t help. “When the subject turns to Super Bowl predictions, you’re on your own. We are an Eagles family and remaining hopeful.”
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1 U.S. Bureau of Labor Statistics, Dec. 6, 2019 https://www.bls.gov/news.release/empsit.nr0.htm
2 U.S. Department of Labor, Dec. 12 2019 https://www.dol.gov/ui/data.pdf
3 Federal Reserve Bank of Atlanta, as of Dec. 12, 2019 https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx
4 U.S. Congressional Budget Office, as of Dec. 12, 2019 https://www.cbo.gov/about/products/budget-economic-data
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Bank of America does not predict any increase or decrease in interest rates.
BofA Global Research is research produced by BofA Securities, Inc. (“BofAS”) and/or one or more of its affiliates. BofAS is a registered broker-dealer, Member SIPC, and wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).