SARASOTA, FL / ACCESSWIRE / June 2, 2021 / There is no question that COVID-19 has had an impact on the economy in the United States and across the world that will last for years, even decades to come. Jeff LaBelle, the CEO and President of Gulf Coast Wealth Advisors in Sarasota points out that many of the impacts have yet to be felt, and it is important to talk about some of the ways the last year and a half have impacted the financial landscape for different people, businesses, and organizations.
One of the biggest ways LaBelle has seen the COVID-19 pandemic affect the economy is through unemployment. With government mandates enforcing a stay at home order, businesses were forced to close up shop leading the unemployment rate to reach record-breaking highs on both state and national levels. According to the United States Bureau of Labor Statistics, the national unemployment rate reached 14.7%, a rate not seen since the Great Depression. Several states have had to borrow from the federal government to cover unemployment claims, as many businesses were unable to bounce back to their original productivity levels pre-pandmeic.
Nonetheless, the stagnancy we currently see in employment rates is not due to a lack of jobs, but moreover stems from a reluctance to return to in-person work. With salaries in minimum-wage working jobs yielding less of a return than unemployment checks, many have not seen an incentive to start back working full time jobs. On the other hand, those with extra money saved up and received through stimulus checks, have even less of an incentive to get back into the workforce at this time.
Eventually, as unemployment benefits and pandemic assistance programs cease, there will be many people looking to reenter the workforce, making some may have to take wages that are less than what they are getting now.
Because of the reluctance of employees to return to in-person jobs, employers are having to provide incentives like higher salaries to newly-hired employees and ‘back to the office' bonuses in efforts to entice former employees to return. While more pay for employees is certainly something most people support, in this case, employers are already strapped for cash making such extra expenses trickle down somewhere else: the consumer. Therefore, by paying higher wages to incentivize people to return to work equates to such costs being recouped and passed down to the consumer in the form of higher prices.
This cycle of higher wages forcing higher prices is what is called inflationary pressures. This term refers to the supply and demand pressures that push a price increase on a good or product and is simply referred to as the continuous rise of prices over a period, leading to a decrease in the purchasing power of the currency. Inflation is being seen all over the economic arena, from purchasing prices on large and small goods to borrowing costs, medication prices, and more.
On the other hand, a looming effect of the pandemic can be seen in its effect on the residential housing market. With a rapid increase in housing demand and limited supply, Homes are selling for thousands over the asking price. Mortgage interest rates are being kept low by the Federal Reserve, however, the rapidly increasing prices of homes may discourage some people from buying. With COVID-19 slowing down the production and supply of lumber, the prices for lumber have steadily been increasing along with the increase in demand for houses. Homebuilders have had difficulty keeping up with the supply and demand imbalance, which will increase prices until the supply of lumber is built back up.
Overall, global supply chains have been hit heavily by COVID-19 and will take years to get back in working order to produce enough goods to meet growing demand. This will continue to have an impact on the economy worldwide. Once supply is built back up, some of the inflation we see on the costs of goods and services will likely go back down to a more familiar number, however, that will take time and there is no indication of when that sense of "normalcy" will return.
Lastly, the pandemic has also affected how banks and financial institutions lend money and approve credit. With so much uncertainty around jobs, people are finding it hard to get approved for mortgages, and other forms of long-term credit. This is in part because these financial entities cannot accurately assess all the short-term risks, less credit availability makes it hard for consumers and businesses to sustain and grow. This is an obvious sign of economic uncertainty and upheaval, and one that those with investment portfolios want to pay attention to. LaBelle stresses that everyone should do two things; pay attention to economic indicators and plan accordingly. Those who have investments need to take steps now to protect their portfolios and investment objectives. Financial markets are becoming very volatile, and rapid swings up and down in interest rates can make a big impact.
Jeff LaBelle is the president and CEO of Gulf Coast Wealth Advisors. Having been in the business since 1987 he has extensive knowledge and experience in the financial industry. LaBelle currently has a thriving practice in Downtown Sarasota. LaBelle is a fee-based advisor who specializes in conservative customized portfolios. Learn more and connect with Jeff LaBelle through the Gulf Coast Wealth Advisors website.
3Source: www.bls.gov/opub/ted/2020/43-states-at-historically-high-unemployment-rates-in-april-2020.htm
Jeffrey Labelle offers Investment Advisory Services through Kovack Advisors, Inc. an SEC Registered Investment Advisor, 6451 N. Federal Highway, Suite 1201, Ft. Lauderdale, FL 33308 (954) 782-4771. Gulf Coast Wealth Advisors is not affiliated with Kovack Advisors, Inc. Jeffrey Labelle is registered as an Investment Advisor Representative in Florida.
CONTACT:
Company Name: Gulf Coast Wealth Advisors
Contact Person: Jeffrey LaBelle
Address: 1 South School Avenue, Suite 501, Kane Plaza Sarasota, FL 34237
Phone Number: 941-362-0700
Website Link: http://gulfcoastwealthadvisors.com/
SOURCE: Gulf Coast Wealth Advisors