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How We Tend to Project Our Own Situation onto the Economy – Presented by Mark K. Lund, Utah Financial Advisor

Financial Advisor UtahYou see one headline that says, “Inflation Finally Under Control,” followed by one that reads, “Banks Wary of Further Inflation.” A news outlet announces, “Unemployment Near Record Low.” Yet on the same day another says, “Tech Companies Eliminate Thousands of Jobs.”

You might wonder, are we in good economic times or bad? What’s really going on?

The multi-trillion-dollar financial engine we refer to as “the economy” is unimaginably complex. How it appears to be performing depends largely on which small part of it you measure and, perhaps, who is doing the measuring. For example, inflation was recently reported to be down substantially from record highs of a year ago. Yet it’s still about twice as high as the Fed’s ideal target.1

Or look at unemployment. Tech companies, such as Microsoft, have announced that they will be reducing their payrolls by thousands of workers. But this comes after adding tens of thousands of new employees during the pandemic. And the reductions are expected to come mostly through attrition and not hiring existing open positions.

This “framing effect” can even affect rigorous economic research. Early this year, the Conference Board’s monthly consumer confidence index fell sharply. Yet for the same period, the University of Michigan’s consumer sentiment index was up by 12%. The discrepancy, it turns out, is because the Conference Board measures changes in the labor market and inflation, while the Michigan survey is more focused on household factors like gasoline prices.

Adding to this perception problem, we all tend to project our own situation onto the economy at large. If we can’t find a job, unemployment is a problem. If the landlord raised our rent, then rising housing costs are an issue.

The polling company Gallup found, unsurprisingly, that people’s political affiliation has a significant effect on their economic expectations for the near future. If you support the party in power, you think things will be getting better. If you like the opposition, you tend to be much more pessimistic about what’s around the corner.

It’s good to remember that economic data is a generalization describing what happened for hundreds of millions of people. Your experience most likely has been, and will be, very different.

As a prudent investor with a long-term focus, you don’t need to worry about what the experts say is going to happen, especially in the near future. Working in partnership with your trusted financial advisor, you are free to continue along the financial plan created specifically for your unique situation and based on real numbers.

Rather than fearing the future, you can take a diversified, long-term approach that expects ups and downs, including those related to the never-ending cycle of financial news. Acting on the things you have control over is much more productive than worrying about guesses on macro level trends.

If you ever have any questions about your investments or retirement plans, please feel free to give me a call at 801-545-0696.

Regards,
Mark Lund
Stonecreek Wealth Advisors, Inc.
11576 S State Street, Bldg. 1002
Draper, UT 84020

Sources:
1. http://go.pardot.com/e/91522/onomy-theres-good-reason-to-be/93kwgn/2025338869?h=jaud7gxMfg4ssg0ZR5M1x-VnyeNRdx2j3Bml18chvMo

Disclosure:
This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by Efficient Advisors, LLC (“EA’) for Mark Lund, Mark is a Financial Advisor in Utah. He is known as a Wealth Advisor, The 401k Advisor, Investor Coach, Financial Planner, Investment Advisor and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. a fiduciary, independent, fee-only, Registered Investment Advisor firm providing investment management and retirement planning for individuals and 401k consulting for small businesses. Mark’s newsletter is called The Effective Investor Newsletter. Cities served in Utah are: Salt Lake City, Salt Lake County, Utah County, Park City, Murray City, West Jordan City, Sandy City, Draper City, South Jordan City, Provo City, Orem City, Lehi City, Highland City, Alpine City, American Fork City. The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. All charts and graphs are presented for informational and analytical purposes only. No chart or graph is intended to be used as a guide to investing. EA portfolios may contain specific securities that have been mentioned herein. EA makes no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.

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