Call it Christmas in July because there’s so much to unwrap this week. But spoiler: The gifts aren’t that great. Is there a recession wrapped up in strong labor market data? Depends on who you ask. All we wanted was a “Renaissance”…
Headlines, Skimm'd
You raise me up. On Wednesday, the Fed increased interest rates by three-quarters of a percentage point. Because inflation is still high. And people are changing their habits — buying cheaper brands and driving less — to keep up with out-of-control prices. ICYMI, it’s the fourth time the Fed has raised rates this year to try to cool inflation and slow the economy without causing a downturn. And more hikes may be on the way. (See how rate changes can impact credit cards, mortgages, and more.)
By any other name.President Biden and Fed Chair Jerome Powell say ‘we’re not in a recession.’ Buutt…GDP shrank again in Q2. Hint: Gross domestic product measures the total value of the goods and services produced in the country. Basically, it tracks the overall health of the economy (like a Fitbit for US businesses). Some experts define a recession as two consecutive quarters of falling GDP. But Biden and Fed officials are optimistic thanks to a relatively strong job market. Other areas of the economy are looking better than expected, too (see: below).
Not all bad. This week’s earnings reports had analysts and investors bracing for recession-affirming news…that didn’t exactly come. Meta posted its first-ever annual revenue decline. But other big tech companies including Alphabet, Microsoft, Apple, and Amazon saw much better results helping the S&P 500 end the month on a high note. Meanwhile, Walmart says inflation will continue to hurt its profits, sending stock prices lower. But good news (for shoppers, at least), the retail giant said it will be slashing prices on inventory for goods like clothes and home office equipment.
Let’s Talk About
Should you worry about a recession?
Long story short, no. If a recession is upon us, there’s nothing you can do to stop it. But there are steps you can take to minimize its impact. Hint: Panicking is not on the list. “If you scream ‘We have a recession!’ and then people massively cut back on spending. Well, guess what? We’ve got a recession,” economist Claudia Sahm tells Skimm Money. We asked her and several other economic experts when we could expect a possible recession and how to prepare accordingly.
Thing to Know
Yield Curve
It indicates the relationship between returns on short and long-term US government bonds. Hint: Usually short-term bonds have lower returns. But sometimes (like before every recession in US history) the yield curve inverts. Meaning interest rates on short-term bonds overtake those on long-term bonds. And if we had a recession-predicting crystal ball, it would probably show an inverted yield curve. It’s happened several times in the last few months, most recently last week. One problem? There’s no telling exactly when a recession will happen after the yield curve inverts. History says one could be a few months or several years away.
Make Good (Money) Choices
If you’re looking for a beach read that will make you smarter…
Pick up one of our recs. Pssst…they’ll help you get better with money. Because, let’s be honest, it’s hard to unwind and relax if you’re stressing about your budget. Whether you want to shift your money mindset, take control of your finances, or build your wealth, we’ve got you covered. Go ahead, have some fun(ds) in the sun.
Tips Don’t Lie
Headed out on vacation? Let your colleagues know you’re logging off with a clear OOO message. Because more and more workers aren’t showing up to work this summer. Which means it’s extra helpful to let people know when you’re unavailable. (Plus, it’s important for your mental health to take a real break.) Your auto-reply should also let people know when you’ll be back and who to reach out to while you’re busy sipping on watermelon frosé. Here’s a basic template to get you started:
Hi there,
Thank you for your message. I will be out of office until [DATE] without access to email. If your request is urgent, please reach out to my colleague [NAME] at [CONTACT INFORMATION]. Otherwise, I look forward to getting back to you upon my return.
Thank you,
[YOUR NAME]
Skimm more tips for writing the perfect OOO message and (bonus) follow our step-by-step instructions for how to set it up. Then get to relaxing.
Crypto, Decoded
You don’t have to trade coins to make money in crypto. Meet staking, aka passive investing for cryptocurrency. It works kind of like bonds or CDs where you lock up a certain number of coins for a set period to earn interest. Instead of HODL-ing crypto in your wallet, it becomes part of the blockchain verification process and you get rewarded with more crypto. There’s typically a minimum investment that would probably max out your entire investing budget…and then some (hint: the minimum is around $53,000 for ETH2 right now). But for a more affordable alternative, you can join a staking pool on a platform like P2P or Stakin. It’s still crypto, though, which means there’s plenty of risk involved. Find out if the rewards might be worth it to you.
Hot Off the Web
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Awkward layoff conversations are apparently a big challenge facing companies. This startup wants to help.
Will student loan payments resume on August 31? President Biden is (still) thinking about it.
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