Page 10 - August 2022 Issue.indd

DOLLARS AND SENSE by Tolbert Rowe

Factors That Affect Your Credit Score

As I write this in mid-July, we got a lot more. Robinhood investments has a recession is the unemployment rate
the wonderful news that year over made it easy for investors to put money goes up. Currently many businesses
year inflation went up 9.1% in June, in stocks, options, ETF’s, fractional are screaming for workers, and there
another historic high. Because of this shares, and cryptocurrency. Many doesn’t seem to be any significant
new revelation the Federal Reserve may investors, or I should say “speculators” improvement any time soon. At least
increase rates by 1% later this month are under the age of 40 and are not the American consumer will continue

instead of the .75% previously projected. accustomed to actually “losing” money to have cash flow to spend, but infl ation
in the market. will continue to be a significant drain on

President Biden has tempered this the American consumer’s pocketbook.
unwelcome news by saying this 9.1% Watching the balance of their investment
increase does not reflect the 10% decline go up 400%-500% or even greater, novice As the cost of living goes up people

in gasoline prices we have seen since it investors felt like professionals. Blinded will adjust their spending accordingly.
peaked at over $5 per gallon in early by the prospect of hitting a home run Those who continue to remain
June. Who knows, by the time you read with a risky investment they failed to employed will become more aware
this gasoline could be back over $5 per consider the risk in that investment. of where their money is going. Some

gallon again, and our euphoria of $4.40 The value of cryptocurrency is derived consumers have and will continue to
will disappear. Who really believes that primarily from other speculators. What use personal savings to offset higher
$4.40 gas is a “good deal” anyway? is the value basis of cryptocurrencies? prices. The personal savings rate for
Other speculators. Making money was US consumers reached a high of 33.8%
If you like to eat you have to buy easy in a market when everybody was in April of 2020 at the beginning of the
groceries, so you are aware of how winning and portfolio balances were pandemic when consumers had few
much less your dollar is purchasing in doing nothing but going up, until the places to spend money. Th e consumer
the grocery store. There is even talk of market correction. savings rate is defined as the percentage

some people beginning to hoard things of disposable income left after taxes
to avoid higher prices down the road, The young will have time to recover and other spending. The savings rate
much like people who buy, or “invest” from their losses in the market, those remained above 15% for 2020 and
in forever stamps the day before the of us who are longer in the tooth, not 10% for most of 2021 as trillions in
price goes up two cents. I know, who so much. government pandemic dollars hit bank
mails anything anymore? You did before accounts.
paying bills online became so popular. One characteristic of this economy is
employment is extraordinarily strong. It has dropped to 5.4% in 2022 as higher
Our 401(k) balances have lost as much There are still two job openings for every prices have taken a bigger percentage of

as 30%-35% of their value in the last six unemployed person, so there is no lack disposable income and consumers are
months and many investors, swept up of opportunities to work if one wants spending down the savings, they have
by the euphoria of cryptocurrency, lost to. Usually, the main characteristic of accumulated over the last two years.

With less savings to offset higher prices

many consumers will cut back on their
“Your Mortgage Consultant Since 1985”
spending or adjust to lower priced

items. This is already happening as sales
Purchase or Refinance at discount stores like Dollar General,
Dollar Tree and others are increasing.
Other consumers are continuing to
spend but using credit cards to buy
now and pay later. Outstanding credit
115 E Dover St. Ste 3 - Easton, MD card balances are over $900 billion,
tolbert@baycapitalmortgage.com C. Tolbert Rowe, close to historic highs and issuers are
www.baycapitalmortgage.com NMLS Vice President/Lending watching the delinquency rate very
182844
closely. Increasing delinquency rates
410-819-3005 / cell 410-310-3520 on revolving debt is a good indicator

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