We’ve had a few rough financial years as a country lately. Total economic collapse, high unemployment, the housing bubble, and the massive national debt have all overshadowed the last half decade. But it’s a new year now, will things turn around? Is our country’s future bright? And how should we plan our individual financial decisions around these trends?
I’m going to do my best to answer some of these questions, and make some predictions for the new year. Take all of this with a grain of salt. While I am an economics student, I am by no means a professional, and the below information and predictions are for entertainment and informational purposes only. I’ve made these conclusions based on what I’ve seen happening at the end of this year, as well as what other economists have said and what makes logical sense.
But on a lighter note, if you go to the bottom of this post, you’ll see there is a form to enter a $100 giveaway! Read more about it below.
Going Over the Cliff?
You’ve probably heard a lot about the so called “fiscal cliff” lately. For those of you who don’t know all the details, it is a combination of automatic financial changes for our country that began today (assuming no new legislation was passed since I wrote this). The first, and most important, of the changes is the expiration of the Bush tax cuts. In other words, if our government doesn’t do anything to stop this, everyone will have their taxes raised to the levels they were at back in the 90′s. This means less money in the hands of every consumer in America, so be prepared to pay a higher tax bill this year if nothing is done to change this.
The second major change is the automatic implementation of federal spending cuts that apply to virtually all areas of the government, including defense. This may not impact you directly, but it will likely have a negative effect on our Gross Domestic Product (GDP).
Experts have said that this combination will bring an immediate hit to our GDP of around 3 to 5 percent. That could result in massive hits to the stock market, further rises in unemployment, and other negative effects that may impact us all. If this issue isn’t dealt with soon, make sure you are prepared to weather a storm.
Rebound of Real Estate
After the plummet of 2008/2009, the real estate market has been relatively stagnant until very recently. But we’ve finally started to see prices begin to rebound. In my local area of Boise, I’ve seen between 10 and 20 percent increases in real estate prices since I moved here six months ago. While not all areas have seen that dramatic of a difference, most have seen some positive growth. After years of a buyer’s market, I’m predicting that more and more people start taking advantage of low interest rates and home prices, and that increased demand will cause some continual growth for the next few years in the real estate market. If you don’t already have investments in real estate, you may want to consider making some quickly.
The Impact of Obamacare
Regardless of your opinions on politics, no one can deny that the health care overhaul passed several years ago will drastically change things for our economy. Nothing even remotely close to this has ever been tried in America before. For starters, the increased burden on businesses has already resulted in layoffs (many of them very public), and I don’t doubt it will happen more in the future. On the other side of things, we may finally see health care prices stop their outrageous climb. Hopefully, some of the provisions that have been implemented will do their job and curb costs for the average American. Of course, we all know there are better ways to decrease your spending on health care, but I digress. My personal opinion is that overall, these mandates will have negative economic impacts on our country. But I’m very interested to see how things play out in the next few years.
To celebrate the new year, I joined a group of other financial bloggers in co hosting a $100 reader giveaway. The winner can receive the money either threw Paypal or as an Amazon giftcard. To enter, you simply have to subscribe through various social channels (RSS, Facebook, Twitter) to the blogs below. Use the Rafflecopter form below and lock in your chance of winning some free money!