Interest Rates – Social Security & Medicare – The Markets

Interest Rates!

Everyone realizes the cost of borrowing has a significant impact for our economy and each and every one of us.  Directly or indirectly!

Last week, several of the Federal Reserve representatives suggested the Fed may be done raising rates.  Why?  Market interest rates, which change daily by the supply and demand needs of governments, businesses and individuals have risen significantly so far in 2023.  Higher market rates have a direct and immediate impact on new borrowing.

Why have rates risen so far when inflation has moderated.  3 primary reasons in my opinion.  The economy has been more resilient than many first believed, the Fed selling off a significant amount of bonds from its balance sheet, and the recent massive issuance of new Treasury debt from the delay in raising the US debt ceiling.

If the Fed does sit back going forward, I believe that may be a positive catalyst for both Stocks and Bonds. 

Social Security and Medicare 2024

Figures were released for both Social Security and Medicare for 2024.

Social Security checks will increase in January by 3.2%.  Over the last 3 years, the cost of-living adjustment (cola) has increased 5.9%, 8.7% and now 3.2%.

If you’re 62 or older, you are benefiting.  If you are collecting, your check increases in January following the announcement of an increase the prior October.

If you’re not collecting and 62 or older, your benefit % increases each year you don’t collect between 62 and 70.  Additionally, the cost of-living adjustment is also added to the increased percentages for a potentially significant increase.

Medicare Part B premiums will increase by 9.8% from 164.90 per month to 174.70 per month. 

For those who pay the Medicare Income Related Adjustment, I’ll have those figures when our Key Data for 2024 is available.

The Markets

Last week the markets were mixed with the Dow and S&P 500 gaining and the Nasdaq, Russell 2000 and foreign stocks moved in the opposite direction.

Oil finished the week at $87.72 per barrel.  Oil is trending towards the upper end of the 2023 range between approximately $70 and $92 per barrel.  With 2 wars looming, logic would suggest oil will remain towards the upper end of the range and perhaps temporarily higher.

Higher oil can certainly be inflationary as gas prices will increase, however if the economy is truly slowing because of higher rates, higher gas prices can reduce spending in other areas.  Let’s keep our thumb on the pulse!!

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