We’re not living in 1929. It’s important to remember that as we watch the stock market crash and our personal net worth take a big hit.
While that has certainly happened, it’s important to note that the stock market isn’t the economy. We’re not on the cusp of the next Great Depression. Instead, we have a market that’s spooked by rising inflation (i.e. stuff costing more) that’s also struggling with supply chain issues caused by an unparalleled global pandemic.
Yes, many things cost more including basic needs like food and shelter, as well as near-basic needs likes cars and gas. But, while inflation has been real, that’s not the full story of the U.S. economy.
We’re also living at a time where the unemployment rate (3.6%) remains near historic low (where it most likely would be if jobs weren’t so plentiful allowing some people to sit out of the labor market for a period). The labor picture has for a very rare time in American history titled in favor of workers.
This has led to jobs in the retail and service space which once paid minimum wage while offering minimal benefits to offer $15 an hour or more along with perks like free college tuition. That’s not to say that these jobs even pay a living wage (it depends a lot upon where you live) but the situation for workers in these spaces has notably improved.
The economy has its struggles, but it’s not a clear picture. High house prices for one person means a home that has gained a lot of value for someone else. And other issues — like the high cost of gas and the shortage of new as well as used cars — are tied to relatively short-term problems.
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But What About My Investments?
Stock markets crash. That’s sometimes an indication of greater economic problems, but the U.S. stock market has never failed to recover its losses — often in a fairly quick period. That’s cold comfort as you see red in your portfolio, but if retirement (or whatever you plan to spend your invested money on) isn’t now or in the next year or two, a “crash” is something expected that can be used to your advantage.