The Fed Holds on Rates, But the Dot Plot Thickens…

The Federal Reserve Open Market (FOMC) committee met this week and decided to keep short-term rates where they are at 5.25% - 5.5%. Market watchers were expecting no hikes but were looking for insights into possible future hikes. In his comments, Fed chair Jerome Powell reiterated that the committee intended to keep rates higher for longer to bring inflation down further. In the chart below, you can view the FOMC’s dot plot, which is the projected path of the Fed’s short-term rates as predicted by each member of the committee. As you can see in the chart, about twice as many committee members predict there will be one more rate hike by year-end. You can also see they expect short-term rates to remain quite high for the next few years. If you average the predictions of committee members, rates will be at about 5.0% for much of next year, 4.0% for 2024, and just below 3.0% in 2026. Those numbers are higher than what most expected. CNBC

FAI 09.22.23

What Higher for Longer Means for Consumers: The FOMC committee members predict that rates will be higher for longer. They did not predict that rates would be this high a year or two ago so keep in mind, that all decisions will be data-dependent. But if they are correct this time, it means that inflation will be higher for longer as well, which means consumers will continue to experience price increases for services, rent, homes, food, energy, etc. It also means that interest rates for loans of all types – mortgages, HELOCs, credit cards, and student loans, will probably stay higher for quite a while too. That’s the bad news, the good news is that inflation will stay higher for longer because the economy has been resilient and growing with plentiful jobs.

U.S. Government Budget Saga: The government shutdown is a real threat that is the result of 20 hardline GOP conservatives. Per insiders, the 20 “extreme” conservatives want to shut down the government and get rid of McCarthy as Speaker and their behavior is irritating long-time Republicans and Democrats. McCarthy may entice Democrats to vote for and pass the budget by getting rid of the impeachment inquiry of President Biden, thereby isolating the holdouts. Who knows where this goes, but stay tuned.

RSWA Webinar October 12^th at 5:00 PM – Retirement Beyond the Financials: RSWA will be hosting retirement expert Alan Spector as he discusses retirement’s challenges, myths, and opportunities. He will also present his 10 Secrets for Creating and Living a Fulfilling Retirement. We are looking forward to this very popular presentation and it is open to everyone so please share the link with anyone interested. If you haven’t received an email invite, please reach out to anyone at RSWA and we will get one to you.

Financial Planning/Investment Strategy Corner:

Retiring in a Different State: Many people dream of moving during their retirement years to enjoy better weather and the ability to pursue activities and hobbies that they have put off during their working years. But before you move, there are many things to consider such as state and city income and Social Security taxes, finding adequate health care, and how close you are to family and friends – and that’s just the start. Housing costs and homeowners’ insurance can also be large factors (especially if you will need wildfire or flood insurance). Do lots of research and consider renting in the new state for a year before deciding to put down roots. Once you have relocated, a whole new list of tasks will emerge such as getting a new driver's license, updating your passport address, registering for voting, finding new doctors, setting up a local bank account, and most importantly, updating your wills and estate plans to comply with state laws. Be certain that your state for retirement is right for you, so you can enjoy your retirement years to the fullest! Here are some resources:

Quick Hits:

In five years, a historian predicts AI will lead to the end of human-led history with powers we cannot predict, but an AI creator and entrepreneur predicts it will lead to enormous productivity gains and will be controlled with sensible regulations. Watch the eight-minute debate: The Economist – YouTube
Let the leaf-peeping begin! Here’s a national fall foliage interactive prediction map so you can check out peak times near you: Smoky Mountains
How to do the Scorpion Stretch, and why your hips and back will love it: The Healthy
The art of the great comeback lines and how to use them: WSJ
9 ways to combat self-criticism: Time
REM sleep is magical. Here’s what experts know: NYT

The Miracle “Drug” Turns Out to be Exercise: The world is filled with clickbait on supplements, crazy diets, and other enticing things to increase health and extend lives but simply exercising and moving more unequivocally helps. The list is endless on how exercise improves health by reducing the risk of cardiovascular disease, diabetes, cancer, Alzheimer’s, stress, helps older adults reduce falls, improves immunity, and much more. Structured exercise even reduces cellular biomarkers for aging. So, how much exercise should you get? The federal government recommends 150 minutes of moderate-intensity exercise a week. However, researchers analyzed data on 650,000 adults over a decade and found that those who get half of the federal recommendation added an average of 1.8 years to their lives. Those who got two or three times the federal recommendation added an average of 4.2 years to their lives. What activities work? Really, anything, but racket sports, running, and walking showed the biggest benefits. Anything you can stick with is best. The Simple Way to Fight Aging, According to Experts - WSJ

What If I Can Only Exercise for One or Two Minutes, Will it Help? Yes! A study released in 2022 found that adults ages 40-69 who engaged in spurts of movement for 1-2 minutes, three times a day, significantly reduced their risk of death from heart disease or cancer. One minute of body weight resistance exercises such as squats or push-ups showed benefits as well. So, any amount of exercise helps – even a minute! 2 Minutes of Daily Exercise May Help You Live Longer (aarp.org)

Quote: “Attitude is a choice. Happiness is a choice. Optimism is a choice. Kindness is a choice. Giving is a choice. Respect is a choice. Whatever choice you make makes you. Choose wisely.” Roy T. Bennett,

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