Fresno Financial Advisor News: The Effect of Debt on the Global Economy

The national debt is a measurement of how much the federal government owes creditors, most commonly depicted as a percentage of gross domestic product (GDP). A high debt-to-GDP ratio is considered viable when the economy is expanding, because that growth allows the government to generate higher tax revenues to help pay down the debt. However, it’s not good when the economy is in decline, which is the current status not only in the U.S., but in many countries throughout the world.1

For context, the stimulus efforts and tax cuts that allowed the U.S. to emerge from the Great Recession significantly increased the national public debt. In 2010, the debt ratio was 52% of GDP, but by the end of 2019, it had risen to 79%, the largest increase in any decade since the post-WWII 1940s.2 But now, according to the Congressional Budget Office, the U.S. debt ratio is estimated to reach 98% by the end of the year.3

Speaking of debt, how has your household fared in the wake of this year’s economic decline? Has your debt-to-income ratio increased substantially, or do you have it under control with plenty of income to cover your expenses? It can be a challenge to balance your need to pay off debt with your need to invest for the future. It’s a good idea to maintain a balance so you can continue reducing debt while saving for the long-term. It’s also important to regularly evaluate your financial strategy to ensure it reflects your current goals and objectives, so please keep us in mind any time you’re considering making changes to your strategy.

At the recent Bloomberg New Economy Forum, there were calls for more government stimulus  support to boost consumer spending and keep the economy running, and not just in the U.S. Christine Lagarde, the president of the European Central Bank, warned that stimulus needs to continue playing a role until the virus is contained. Like many countries across the globe, Southeast Asia took a hit during the second quarter, rebounded in the third and has braced for increased outbreaks occurring in the final quarter of 2020.4

Wall Street analysts warn that it won’t take much for the U.S., Europe and Japan economies to contract again in the next two quarters, despite the bounce back last summer.5 Overall, economists expect the global economy to shrink by 5% in 2020, in part due to the 20% reduction in world trade.6

One idea to help rebuild economies is to retrain workers who have lost jobs during the pandemic in fields, such as cybersecurity, software programming and other technology positions.7

Fresno Financial Planner Takeaways 

When it comes to Fresno retirement planning Soutas Financial puts your future first. Don’t forget these great reminders: For context, the stimulus efforts and tax cuts that allowed the U.S. to emerge from the Great Recession significantly increased the national public debt. In 2010, the debt ratio was 52% of GDP, but by the end of 2019, it had risen to 79%, the largest increase in any decade since the post-WWII 1940s.2 But now, according to the Congressional Budget Office, the U.S. debt ratio is estimated to reach 98% by the end of the year.3 It’s a good idea to maintain a balance so you can continue reducing debt while saving for the long-term. It’s also important to regularly evaluate your financial strategy to ensure it reflects your current goals and objectives.

Diversifying your retirement assets among a variety of vehicles and alternatives—both insurance and investment oriented, depending on what is appropriate for your situation—may offer you a better chance of meeting your retirement income goals throughout your lifespan. We help our clients with problems sometimes associated with retirement such as stopping spend down and avoiding probate. In doing so we leverage Medicare long term care as well as risk management designed to help accomplish those goals.

When searching for Fresno financial advisors, look no further than Soutas Financial & Insurance Solutions Inc. your Fresno financial planner is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment strategies that focus on Asset Protection, Long-Term Care Strategies, Legacy Planning Tax-Efficient Strategies, IRA, 401(k) & 403(b) Rollovers, Life Insurance, Annuities, Medicare, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Soutas Financial & Insurance Solutions, Inc. are not affiliated companies. California Insurance License # OK48173

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1 Andrew Van Dam. The Washington Post. June 5, 2020. “The unluckiest generation in U.S. history.” https://www.washingtonpost.com/business/2020/05/27/millennial-recession-covid/. Accessed Oct. 5, 2020.

2 Richard Pew. Pew Research. April 28, 2020. “Millennials overtake Baby Boomers as America’s largest generation.” https://www.pewresearch.org/fact-tank/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/. Accessed Oct. 5, 2020.

3 Kathy Koch. EY. March 4, 2020. “The Millennial Economy 2018.” https://www.ey.com/en_us/tax/the-millennial-economy-2018. Accessed Oct. 5, 2020.

4 Hillary Hoffower. Business Insider. Feb. 6, 2020. “How the American millennial is overcoming debt, the dollar, and the economy they were handed.” https://www.businessinsider.com/millennials-great-recession-student-debt-affordability-crisis-2020-1. Accessed Oct. 5, 2020.

5 Kathy Koch. EY. March 4, 2020. “The Millennial Economy 2018.” https://www.ey.com/en_us/tax/the-millennial-economy-2018. Accessed Oct. 5, 2020.

6 Realtor Magazine. Aug. 31, 2020. “Millennials Are Fueling Housing’s Rebound.” https://magazine.realtor/daily-news/2020/08/31/millennials-are-fueling-housing-s-rebound. Accessed Oct. 5, 2020.

7 Laura Bogart. Buzzfeed News. Sept. 28, 2020. “Millennials Are Trying To Shake The Stigma Of Moving Back In With Their Parents.” https://www.buzzfeednews.com/article/laurabogart/millennials-moving-back-in-with-their-parents-adulting?bftwnews&utm_term=4ldqpgc#4ldqpgc. Accessed Oct. 5, 2020.

8 Olivia Rockeman. Bloomberg. Oct. 1, 2020. “Free to Work Remotely, Young Americans Are Covid Road Tripping.” https://www.bloomberg.com/news/articles/2020-10-01/covid-news-remote-work-lets-young-americans-take-road-trips?sref=PJUU2CLn. Accessed Oct. 5, 2020.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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