#21 moneytrends2021

1. Incomes and Jobs
• 1 in 4 workers quit jobs this year (unprecedented)
• People re-evaluated work requirements, personal values,
career options, and work-life balance
• Many unfilled jobs in a tight labor market
– “Striketober” (food plants, John Deere, etc.)
– Hourly, low-wage jobs paid signing bonuses
• Higher labor costs being passed on to consumers
• Rare to have a labor shortage during an economic recovery
#21MoneyTrends2021
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2. Supply Chain Shortages
• Shipping delays for imported merchandise
• Retailers had difficulty stocking inventory
• Lack of computer chips for unfinished products
• Unfilled truck driver jobs for labor to make timely deliveries
• Atypical economic recovery with pent-up spending demand
#21MoneyTrends2021

3. Inflation
• Big increase in CPI-U index; 6.8% from 11/20-11/21
• Sharpest CPI increase in 39 years (since 1982)
• Higher costs for supplies/ingredients, labor, shipping
• Large price increases for new/used cars and energy
• Inflation ate away at workers’ wage gains
#21MoneyTrends2021

4. Vehicle Prices
• Average new vehicle price increased to $41,378 (8/21)
– Reduced availability due to limited supply, high demand
– Limited selection of features for consumers
• Since 3/20, used vehicle prices rose almost 40%
– Major factor in 2021 inflation rate
• Causes include chip shortage, factory shutdowns
#21MoneyTrends2021

5. Homeownership
• Many people adjusted housing priorities
• Record low housing inventory
• Large increase in new and existing home prices
– Lower-cost housing markets had some of the biggest
housing price increases
• Widespread bidding wars; many cash buyers
#21MoneyTrends2021

6. Rental Housing
• Slow rental relief distribution
• Multiple eviction moratorium extensions
• Final eviction moratorium ended 8/26/21 (SCOTUS)
• Some states still have protections through 2022
• Modest eviction increases after moratorium ended
#21MoneyTrends2021

7. Insurance
• COBRA premium assistance under the American Rescue
Plan Act (4/1/21- 9/30/21)
• Medicaid enrollment surpassed a record 80 million
• Supreme court rejected a challenge to the ACA
• “Surprise Billing” rule issued (takes effect 1/1/22)
• Rising cost of homeowners insurance ($1,398 average)
• Steep increases in flood insurance premiums
– New NFIP risk rating pricing method
https://www.freepik.com/vectors/
calendar
#21MoneyTrends2021

8. Credit
• Debt repayment trends
– Big increase in credit card applications (10/20-10/21)
– Record level of consumer credit borrowing (car loans and
leases, credit cards, personal loans)
– Car loan delinquencies, especially among risky borrowers
• Increased home equity loan borrowing
– Drivers: low interest rates and increased home values
#21MoneyTrends2021

9. Loans
• Congress revoked rule that allowed payday lenders to
connect with banks to circumvent state interest rate caps
• Student loan interest and collections suspended through
5/1/22
– Most borrowers have not made payments in ~22 months
– Borrowers should be preparing NOW to resume payments
• PSLF program relief (consolidated loans, military deferments)
• Average car payments in 2021: $563 for new vehicles, $397
for used, $450 for leased vehicles
#21MoneyTrends2021

10. Fraud
• 2021 FTC report: Most common fraud categories:
– #1: Imposter scams
– #2: Online shopping
– #3: Internet services
– #4: Prizes/sweepstakes/lotteries
– #5: Telephone and mobile services
• Pandemic-Related Scams: Fake COVID-19 tests, vaccines,
government benefits, charities, Advance CTC
#21MoneyTrends2021

11. Income Taxes
• Expanded child tax credit (CTC) payments
– CTC: $3,000/child ages 6-17, $3,600/child < age 6
– Half on 2021 tax return and half in advance (unless opt-out)
– Income limit (maximum $): $75k (s), $112,500 (hh), $150k (mfj)
• Late announcement: up to $10,200 of 2020 unemployment
benefits were tax-exempt
• “Below the line” charitable donation write-off for non-itemizing
taxpayers in 2021: $300(s)/$600 (mfj)
• New tax bill?
#21MoneyTrends2021

12. Investing
• Inflation fears boost use of TIPS and Series I-bonds
– I-Bonds paid 3.54% (5/1-10/31/21), 7.12% (11/1/21-4/30/22)
• “Lottery investments” and FOMO
– Cryptocurrencies and nonfungible tokens (NFTs)
– “Meme” stocks
• Increased interest in environmental, social, and
governance (ESG) investing
#21MoneyTrends2021

13. Stock Market Events
• DJIA Milestones: $30,409 (12/31/20), 31k (1/21), 32k (3/21),
33k (3/21), 34k(4/21), 35k (7/21), 36k (11/21)
– Periods of high volatility related to COVID-19 variants and other factors
• High-flying meme stocks (GME, AMC) & WallStreetBets
– ~ 22.5 million Robinhood app users in 2021
– Robinhood removed digital confetti (4/21)
• The rise of SPACs (shell companies that go public with the
sole intent of combining with a private firm to take it public)
#21MoneyTrends2021

14. Cryptocurrencies
• Bitcoin trades above $50,000 for first time (2/21)
– 74% increase, was $27,900 on 12/31/20; $50,788 on 12/23/21
– Total market value of Bitcoin passed $1 trillion (2/21)
• “Pipeline hackers paid in crypto; funds recovered (6/21)
• New products: Crypto IRA and Bitcoin IRA
– First bitcoin ETF; raised $1.1 billion in first 2 days (10/21)
• NFTs: Web’s source code, Martha Stewart Art, etc.
– Nonfungible tokens are “digital collectibles”
– First NFT ETF announced (12/21)
#21MoneyTrends2021

15. Retirement Planning
• New “life is short” mindset prompted some retirements
• Return of RMDs for taxpayers age 72+ (suspended in 2020)
– Use previously-used life expectancy tables for 2021 RMDs
– New IRS life expectancy tables debut for RMDs starting in 2022
• More mandatory state-run auto-IRAs (small business workers)
• New research (Morningstar): Withdraw 3.3% of savings (not 4%) in 1st
year of retirement and inflation-adjust annually; later challenged by original
“4% Rule” researcher (Bengen) who recommended a 4.7% withdrawal. The
studies used different assumptions. Take-away: The jury is still out!
#21MoneyTrends2021

16. Social Security
• 2021 Trustees Report: Social Security and Medicare both
face long-term financing shortfalls
– Both programs will see cost growth “substantially in excess of GDP
growth” through mid-2030s
– Employment, earnings, interest rates, and GDP dropped substantially
during Q2 of 2020
• OASI fund projected to pay full scheduled benefits until 2033
(one year earlier than 2020 projection)
– After that, tax income can pay 76% of benefits
Source: Social Security Administration (2021)
#21MoneyTrends2021

17. Financial Anniversaries
• 125 Years (1896): Dow Jones Industrial Average
– Started on May 26,1896 with 12 companies
– 40.94 on first day; reached 36,000 in November 2021
• 50 years (1971): NASDAQ stock exchange created
• 40 Years (1981): Economic Recovery Tax Act
– ERTA decreased marginal tax rates from 70% to 50%, indexed tax
rates for inflation, and reduced estate and capital gains taxes
• 20 years (2001): Largest tax cut law in two decades
– EGTRRA lowered tax brackets and allowed higher IRA contributions
and catch-up contributions for workers 50+
#21MoneyTrends2021

18. American Rescue Plan Act
• Third round of stimulus for many Americans
• Broader dependent definition (vs. 2020 stimulus)
• Extra $300/week unemployment benefit extended
– Additional 25 weeks from 3/14/21 through 9/6/21
• Six advance child tax credit payments (July-Dec. 2021)
– Half of total CTC available on 2021 tax return
#21MoneyTrends2021

19. Pandemic Finances
#21MoneyTrends2021
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20. U.S. Savings Rate
19.9% (1/21) 8.2% (9/21)
12.6% (4/21) 7.3% (10/21)
10.6% (7/21) 6.9% (11/21)
Source: Federal Reserve Bank of St. Louis: https://fred.stlouisfed.org/series/PSAVERT
#21MoneyTrends2021

21. Financial Education
• 26 states and Washington, DC introduced personal finance
education mandate bills in 2021 (higher number than average)
– Only 1 in 5 students are currently guaranteed to take a standalone
personal finance course prior to HS graduation
• Ohio became the 10th state in the U.S. to require high school
personal finance education (11/21)
• New financial education curricula, professional development,
games, and advocacy work from NGPF: https://bit.ly/32kKVCR
#21MoneyTrends2021

#21 moneytrends2021

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#21 moneytrends2021