The past few years have been uncertain for consumers and business owners. While some economic signals were positive in October 2023, the Israel-Hamas conflict could negatively impact economic growth in the months to come.
Keeping up with the US economy is more important than ever. Here’s what you should know about the month of October and how you can implement sound financial strategies to build a better future.
Overview of the Economy
Experts are still predicting slow economic growth on a global scale and believe inflation will soon drop.
The U.S. is partly responsible for this positive forecast. Consumer spending has remained strong with over $700 billion in retail spending for the month of September, and payroll numbers are exceeding expectations with 336,000 new jobs created last month.
However, wage growth remains slow at 4.2%, and there are other indicators that the US economy isn’t in good shape, such as Microsoft recently announcing over 600 layoffs or the beginning of a decline in home prices.
On October 7th, an attack on Israeli territory sparked a violent conflict with Hamas, resulting in over 4,000 casualties. Combined with the ongoing conflict in Ukraine, this war is affecting the global economy by creating a climate of uncertainty and causing rising oil prices.
Post-Pandemic Recovery
The US economy is recovering from COVID-19. On a global scale, economic performance is slightly better than anticipated with a projected growth of 2.3% in 2023 and 2.5% in 2024.
Strong spending from U.S. households is one of the factors contributing to the global recovery.
Stock Market
Historically speaking, September tends to be one of the slowest months for the stock market. September 2023 was no exception, and this trend continued throughout the first weeks of October.
The past few days have seen a rally around the financial sector with Bank of America and Goldman Sachs posting promising earnings. For the week of October 16th, the NASDAQ gained 1.2% and the Dow Jones Index increased by 0.9%.
Bonds still have strong yields and are providing investors with an alternative to the stock market.
Inflation
The Feds decided against increasing the interest rate in September. The current policy will remain in place until inflation goes back down to 2%, which means interest rates will likely stay high for the months to come.
The Social Security Administration announced a 3.24% COLA adjustment for 2024 to account for inflation.
Oil and Precious Metals
Oil prices have been rising since the beginning of the Israel-Hamas conflict. President Biden announcing a trip to Israel on October 17th resulted in oil rising above $90 a barrel.
The outcome of President Biden’s trip will have a significant impact on oil prices for late October. The possibility of a larger conflict involving more Middle Eastern conflicts could lead to further increases in oil prices.
Precious metals have been following a similar trend. The price of gold dropped to $1,816 per troy ounce in early October but rose back to $1,925 as of October 17th.
Cryptocurrencies
Regulatory uncertainty has resulted in a slow cryptocurrency market. However, Bitcoin exceeded $30,000 in value on October 16th following a rumor that the SEC had approved the Bitcoin ETF.
The SEC is still reviewing the application for the iShares Spot Bitcoin ETF, and this decision will have a major impact on the cryptocurrency market in the months to come.
Financial Planning Strategies
Developing a personalized financial plan is crucial for staying ahead. Even though the US economy for October 2023 includes a mix of positive and negative signals, you can still work on your personal goals and build a better future for yourself and your family.
Here are a few strategies to explore:
- Make your money work for you by investing. With strong bond yields, long-term bonds can be a good option if you’re looking for a low-risk investment.
- Build a diverse portfolio to gain exposure to different industries and asset categories. The financial sector is currently doing well, and other major stocks could go up as Tesla and other companies announce their earnings at the end of the month.
- Are you one of the 40% of consumers who plan on spending more than last year for the holidays? Now is the perfect time to start budgeting for the holidays.
- You should still work toward long-term goals such as home ownership. Even though interest rates are high, home prices are declining and can offset the higher cost of borrowing.
- A recent survey found that more than half of Americans are behind on their retirement savings. It’s never too late to catch up if you fall behind.
Benefits of Making Smart Money Moves Now
Building a better future starts now. Every sound financial decision you adopt this month will pay off in the future.
Achieve Your Long-Term Goals
If you don’t have any long-term goals or have been neglecting these projects, now is the perfect time to go over your financial strategy and identify some steps you can take to build the kind of future you want.
Dealing With Uncertainty
The following months could be uncertain due to conflicts and other external factors. Adopting good financial habits and building a safety net will make you less vulnerable to uncertain economic conditions.
Resources to Help Get You Started
These resources will help with your financial planning:
- Learn about personal finance topics on our blog.
- Reuters or CNN are trustworthy sources for keeping up with world news.
- Use this retirement income calculator to see if you’re on track.
- Check this map to see if home prices are dropping in your area.
Conclusion
October 2023 has been a mixed month for the US economy. We’re entering a period of uncertainty characterized by global conflicts, but some indicators such as consumer spending and employment remain strong.
Related: Making Money Moves: September 2023 Economy Snapshot
