Between December 11 and 31, I have been tweeting about 21 key financial events that took place during 2021 using the hashtag #21MoneyTrends2021.
Below is a written summary of these financial milestones and their impact on family finances.
1. Income and Jobs- An unprecedented 1 in 4 American workers quit jobs in 2021 as people re-evaluated work requirements, personal values, career options, and work-life balance. There were many unfilled jobs and higher labor costs were passed on to consumers.
2. Supply Chain Shortages- 2021 saw shipping delays for imported merchandise, retailers having difficulty getting inventory, unfinished products waiting for computer chips, and a truck driver shortage which delayed freight deliveries.
3. Inflation- The U.S. inflation rate from November 2020 to November 2021 was 6.8%, the sharpest increase in the Consumer Price Index in 39 years (since 1982). Energy costs and used cars experienced some of the largest price increases.
4. Car Prices- Average new vehicle prices reached $41,378 in August and used car prices rose around 40%. There was also reduced availability and limited selection of car features due to limited supply and high demand, the chip shortage, and factory shutdowns.
5. Homeownership- Record low housing inventory led to a large increase in prices for new and existing homes. Demand for houses was strong due to low interest rates and adjusted housing priorities. Widespread bidding wars were reported nationwide.
6. Rental Housing- Rental relief funds were distributed slowly at the local level and there were multiple eviction moratoriums. The final moratorium ended on 8/26/21 with a Supreme Court ruling. Some states/cities have moratoriums through dates in 2022.
7. Insurance- COBRA premium assistance for health insurance was provided under the American Rescue Plan Act and Medicaid enrollment surpassed 80 million. There were also large premium increases nationwide for homeowners and flood insurance.
8. Credit- Demand for credit returned to pre-pandemic levels. Applications for credit cards rose throughout 2021 and 26.5% of U.S. consumers reported (in October) applying for a credit card in the prior 12 months. There were also increased home equity loans.
9. Loans- Student loan interest and collection was suspended through 1/31/22 and relief provisions were added for Public Service Loan Forgiveness. Average monthly payments in 2021 were $563, $397, and $450, respectively, for new, used, and leased vehicles.
10. Fraud- Top fraud categories reported by the Federal Trade Commission in a 2021 report were imposter, online, and internet services scams. There were also COVID-19 related scams including those for fake tests, vaccines, charities, and government benefits.
11. Income Taxes- Tax filing was pushed back to May 17 and advance child tax credits were sent to income-eligible families with children from July to December. There was also late notice of tax exemption for up to $10,200 of 2020 unemployment benefits.
12. Investing- 2021 saw increased Treasury Inflation-Protected Securities and Series I U.S. savings bond purchases due to inflation fears, meme stock (e.g., GME) and cryptocurrency trading, and increased environmental, social, and governance (ESG) investing.
13. Stock Market Events- The Dow Jones Industrial Average rose from $30,409 on 12/31/20 through 32kl, 33k, 34k, 35k, and 36k during 2021. There was also increased use of the Robinhood stock trading app and special purpose acquisition companies (SPACS).
14. Cryptocurrencies- Bitcoin traded above 50,000 for the first time in February and its total market value passed $1 trillion. Pipeline hackers were paid in crypto and funds were recovered. New products included non-fungible tokens (NFTs) and Bitcoin IRAs.
15. Retirement Planning- A new “life is short” mindset, especially among the affluent, prompted many workers to retire and required minimum distributions returned for taxpayers age 72+ with tax-deferred plans. More mandatory state run auto-IRAs were set up.
16. Social Security- A 2021 report from Social Security Trustees projected that Social Security can only pay full scheduled benefits until 2033, one year earlier than 2020 projections. Both Social Security and Medicare face long-term financing shortfalls.
17. American Rescue Plan Act- ARPA provided a third round of stimulus for many Americans and expanded child tax credits to be settled up on 2021 tax returns due in 2022. An extra $300 per week of unemployment benefits was extended for 25 weeks.
18. Vaccination Finances- Economic consequences of not being vaccinated emerged throughout the year and include loss of a job, no “sick days” for work absences due to COVID, higher insurance premiums, and lack of access to events requiring vaccination.
19. U.S. Savings Rate- The U.S. savings rate dropped from 19.9% in January 2021 to 6.9% by November 2021. As many Americans got vaccinated, spending on travel and experiences increased and savings declining, putting pressure on supply chain shortages.
20. Financial Literacy Mandates- 26 states and Washington, DC introduced personal finance education mandate bills in 2021 and Ohio became the 10th state in the U.S. to require personal finance education. Advocacy efforts at the state level also increased.
21. Financial Anniversaries- 2021 was the 125th anniversary of the Dow Jones Industrial Average (started in 1896 with 12 companies) the 50th anniversary of the NASDAQ stock exchange, and 20th and 40th anniversaries of major tax laws passed in 2001 and 1981.
For additional information about these financial events and trends, a resource list is available at https://lnkd.in/dESf_-Xv
This post provides general personal finance information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.