Brandy:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Thank you, Brandy.
Brandy:
So you have talked in the past about the government stimulus providing a boost to the economy, but that looks like it could be changing. Could you give us an update on that?
David Nelson:
Yeah, it sure is. The government responded, as I’m sure everybody’s aware as far as in the wake of COVID-19, with several programs aimed at small businesses and individuals with direct payments, that being a key phrase here. As a result, what we’ll show as far as in the chart that I brought along today, is personal savings rates shot up dramatically, and what’s shown here as far as in the blue line on the top part of the chart is over the last 10 years, the savings rate was fairly constant at about 7%, but once the first stimulus checks were received, it spiked to over 30%.
David Nelson:
And so on the bottom, we’ve got the red line showing kind of the flip flop of that, and that’s the overall credit card balances in the US. It was $1.1 trillion, and after this first round of checks came through, that was cut by $150 billion or it brought it down to 950 billion. So that’s the good news. That was a big tailwind as far as for the economy. However, over last year, what we’ve seen is both of these lines have reversed, and each one of them’s basically back to where we were pre-pandemic levels.
Brandy:
All right. So what implications does this have as it relates to viewers’ investments?
David Nelson:
I’d say the biggest takeaway is going to be for investors to recognize the importance and to understand money flows at the high level. Watching consumers and watching investor behavior is really important in engaging the overall risk as far as in the financial markets.
Brandy:
If you missed any of our discussion, we’ll make it available for you on OurQuadCities.com.