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.
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