As the recent federal budget noted, the consensus view of economists is that a shallow recession is coming.
Other personal finance negatives to dwell on include the heavy load of food prices consistently rising at rates of 10 per cent compared with a year ago and high interest rates on mortgages, lines of credit and more. It’s easy to get mired down in all of this bad news because it affects so many daily and monthly financial interactions.
But a few things are going right today in personal finance, and they benefit a wide swathe of the population. In the first of what will be a periodic series in this newsletter, I want to highlight some the positives happening right now:
Wages: The most recent data on wages shows a 5.4 per cent increase in February for average hourly wages compared with a year earlier. Since last November, wages have risen by between 4.5 and 5.8 per cent on a year-over-year basis. The inflation rate in February was 5.2 per cent, which means wages were rising a bit more than the cost of living.
The job market: The unemployment rate in February was 5 per cent, which is extremely low by the standard of the past 50 years. The tight job market helps put upward pressure on wages, and it makes employers more willing to negotiate both pay and benefits with valued employees.
Savings: Interest rates on savings accounts are holding up, even as guaranteed investment certificate rates edge lower. Returns of 3 per cent on savings are still attainable from alternative banks, and you get between 4 and 5 per cent from high interest savings account mutual funds and exchange-traded funds.
Mortgage rates: It’s early to say anything definitive, but we seem to have reached a peak for both variable-rate and fixed-rate mortgage rates. Lower rates aren’t expected until early next year, but at least we can say that things won’t likely get worse for homeowners.
Stocks and bonds: They’re both up after a hellacious 2022, when both were down. That’s not how it’s supposed to work – bonds should rise or hold their ground when stocks fall. Rising interest rates last year hurt bonds badly. Now, financial markets are betting that rate hikes are done.
