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 1. Individuals
 2. Build Your Knowledge
 3. October economic outlook: One number can’t tell you everything




OCTOBER ECONOMIC OUTLOOK: ONE NUMBER CAN’T TELL YOU EVERYTHING


QUICK TAKEAWAYS

 * Point-in-time numbers reflect just that—a point in time. A short-term dip or
   peak may not indicate a long-term trajectory. Give any new data some time
   before it influences your decisions.
 * Resiliency and flexibility are hard. We’re all craving a breather. Take stock
   in the last quarter of the year and, if you can, celebrate your successes
   both big and small.

Find yourself feeling optimistic about one day’s news cycle and gloomy the next?
You’re not alone. It’s been a roller coaster economy over the last 18 months.

Take job security confidence: It’s a measure of how safe people feel in their
own employment. It’s been slowly ticking back up,1 and yet more than 8 million
people are unemployed and looking for work.

That Jekyll-Hyde news contrast is jarring. “Does everything feel good?” says
Heather Winston, assistant director of financial advice and planning at
Principal®. “No. Have we been in worse places than we are today? Yes. But if a
lot of things are fine, how do we navigate when everything feels confusing?”

Let’s look at a few numbers to figure out what may be ahead, at least in the
short term, and what you can do to possibly roller coaster-proof your finances
(and perhaps your outlook, too).

If a lot of things are fine, how do we navigate when everything feels
confusing?”

Heather Winston, assistant director of financial advice and planning


CONNECTIONS AND COMPARISONS MATTER.

If you feel that things are moving in the right direction, that you’re able to
pay your bills (and then some), and your job is stable, you’re probably OK going
out to eat, booking a vacation, or buying stuff that isn’t strictly a necessity.
That, in turn, enables restaurants, stores, and service companies to maintain or
boost their workforces. Which then enables those employees to pay their bills
and buy their own extra stuff.

We watched that happen in real time this summer. COVID-19 cases dropped. People
got vaccinated and gathered for long-delayed weddings and barbecues and parties.
Spending and hiring ratcheted up.

And then life got bumpy again. Cases jumped. Those sunny headlines have, in some
cases, turned gloomy. But, in general, things aren’t as bad as they were a year
ago, and we don’t know what will happen next.

Which is why comparisons matter.

Think of those news headlines or single data points like a fast-fashion trend:
Here today, maybe gone tomorrow (or next week). “General consumer data tells us
how people are spending,” Winston says. “But you have to put those numbers into
context.”

There’s consumer spending as one data point. Even though people pulled back at
the end of summer, spending in some categories grew up to 30%, and in some cases
exceeded pre-pandemic levels.2

Your wallet: A single number can’t tell you everything you need to know about
the economy. But a single personal finance number—your credit score—can help you
get a better interest rate on big purchases. (Learn about reading a credit score
and why it matters.) When’s the last time you checked yours? Request a free copy
each year to stay alert to any unpaid charges or identity theft issues (you can
get one from freescoreonline.com).


THE STOCK MARKET IS PRETTY … WEIRD RIGHT NOW.

The Dow Jones and S&P have both been setting records in 2021, with overall
trajectories that, for the most part, keep going up.3

Is it the calm before the storm? History says, maybe.

“It feels like it’s overdue, and there are a lot of undercurrents in the data
that might indicate the end of a bull market run,” Winston says. (Read about the
difference between a bull and bear market.)

The challenge for you, as an individual investor, is unwarranted exuberance (or
pessimism) which leads to quick decisions that may be costly in the long term.
“If they are looking at that day-to-day stock market movement and making quick
decisions, it’s possible their timing isn’t great,” Winston says.

Your wallet: One way to get ahead of whatever headwinds might be blowing is to
consider regularly rebalancing your accounts. You’re typically able to do that
at any time. (Learn about asset allocation.)


THE SUPPLY CHAIN WILL KEEP STICKING. YOU’LL KEEP ADAPTING.

Generally when we talk about supply chains, we’re talking about goods—those
scarce semi-conductors that have slowed vehicle assembly lines, for example. But
we’re in a strange time when supply chain pressures aren’t just about goods, but
also about people. There are workforce shortages everywhere.

The supply chain stickiness isn’t likely to resolve itself anytime soon,
especially as different parts of the globe experience different points in their
pandemic recovery. Clothing retailers, for example, are pulling forward
deliveries to help accommodate holiday sales.4 Restaurants are trimming hours
until they can staff up. If you’re like many Americans, you may have boosted
toilet paper supplies and savings.5

There’s uncertainty, but all we really want is, well, certainty. “We’re all
antsy. We want to be done with this and turn the page. It’s taken a big
psychological toll,” Winston says.

Complacency may be tempting, but it’s not the answer says Winston. “Regroup.
Look back at what you’ve accomplished and look ahead at the challenges and focus
on what you can do next,” she says.

We’re all antsy. We want to be done with this and turn the page. It’s taken a
big psychological toll.”

Heather Winston

Your wallet: If you’ve put off a big purchase like a home because costs were too
uncertain, what can you tackle in the next six months to get to a more secure
financial place? (Read about creating a home-buying budget.) For example, paying
down small debts may free up more money for long-term goal savings.


WHAT'S NEXT?

 * Review your asset allocation. Log in to your Principal account. First time
   logging in? Get started by creating an account.
 * Get the help you want. A financial professional may talk you through how
   changes to your financial goals can shift your saving, especially for
   retirement. (Read about if you need a financial professional.) Check with
   your HR department or employer to see if your company’s retirement savings
   plan offers this service. Or, we can help you find one.

--------------------------------------------------------------------------------


READ NEXT

Should you give money to your kids or save for retirement?

Should we retire together? 10 retirement questions for couples

Leave a legacy you can be proud of: 5 considerations for choosing retirement
beneficiaries

1
https://www.forbes.com/advisor/personal-finance/consumer-confidence-stable-income/

2
https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/survey-us-consumer-sentiment-during-the-coronavirus-crisis

3
https://www.wsj.com/articles/record-stock-rally-ignores-wall-streets-phobia-about-optimism-11626600781?mod=article_inline,
https://www.wsj.com/articles/u-s-stock-market-faces-potentially-bumpy-autumn-wall-street-analysts-warn-11631439002

4
https://www.supplychaindive.com/news/retailers-shift-tactics-suppliers-Vietnam-lockdowns/606363/

5
https://www.cnbc.com/2021/08/17/post-covid-revenge-spending-is-costing-americans-765-more-a-month.html

Investing involves risk, including possible loss of principal.

Investment and Insurance products are:

 * Not Insured by the FDIC or Any Federal Government Agency
 * Not a Deposit or Other Obligation of, or Guaranteed by Credit Union or Bank
 * Subject to Investment Risks, Including Possible Loss of the Principal Amount
   Invested

Asset allocation and diversification do not ensure a profit or protect against a
loss. Past performance does not guarantee future results.

Equity investment options involve greater risk, including heightened volatility,
than fixed-income investment options. Fixed-income investments are subject to
interest rate risk; as interest rates rise their value will decline.
International and global investing involves greater risks such as currency
fluctuations, political/social instability and differing accounting standards.
These risks are magnified in emerging markets. Small and mid-cap stocks may have
additional risks including greater price volatility.

The views and opinions expressed are for informational and educational purposes
only as of the date noted and should not be considered investment advice. No
forecast based on the opinions expressed can be guaranteed and may be subject to
change without notice. No investment strategy, such as diversification, can
guarantee profit or protect against loss. The subject matter in this
communication is educational only and provided with the understanding that
Principal® is not rendering legal, accounting, investment or tax advice. You
should consult with appropriate counsel, financial professional or other
advisors on all matters pertaining to legal, tax, investment or accounting
obligations and requirements.

Insurance products and plan administrative services provided through Principal
Life Insurance Co. Securities offered through Principal Securities, Inc.,
800-547-7754, member SIPC and/or independent broker-dealers. Investment advisory
products offered through Principal Advised Services, LLC.

Principal Life, Principal Securities, and Principal Advised Services are members
of the Principal Financial Group®, Des Moines, Iowa 50392.

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