Can I be crotchety for minute? Who on earth thought making ANOTHER Jurassic Park movie was a good idea? At this point, could we please just call them, Jurassic Park: Then Dinosaurs Win\u2026or do they. And why does it cost nearly $100 bucks for a family to go to the movies and when did the Junior Mints box become so small\u2026is there an Not-So-Junior Mints box? Like the rest of my compadres in the ADD millennial generation I digress.<\/p>\n\n\n\n

Speaking of millennials, millennials are like every transportation system in each of the Jurassic Park movies. They work, sort of, up until the point you really need them and then they seemingly make the entire system crash. And, on point (sort of), they present the greatest risk to today\u2019s economy\u2026inflation.<\/p>\n\n\n\n

There\u2019s a lot of noise about inflation. Yes, it\u2019s killing everyone economically. However, the baby boomer generation, in many ways, will simply cut back. I\u2019m not advocating this is fair, or just, it\u2019s just fact. Yet, millennials pose the biggest problem. When do people spend more? Simple, when they feel good, or confident, about their financial future.<\/p>\n\n\n\n

Today, millennials are the LARGEST living generation and they\u2019re either in or entering their PEAK spending years. Whereas, boomers, our second largest living (they were largest by birth) generation is now entering into the period of life of spending decline[1]<\/a>. What does this mean, long term, for our economy?<\/p>\n\n\n\n

Before I answer that, let\u2019s talk about inflation and interest rates. First, interest rates. Millennials, on average, have never seen a 5% 30-year fixed rate mortgage. If inflation continues to rampage the countryside like a T-Rex through a Steven Spielberg money grabber that rhymes with Purassic Jark (see what I did there), then the Fed will continue to raise rates. As rates increase, borrowing (credit) costs increase. How will millennials react to a 7% 30-year mortgage rate, when they think 4.5% is high? Will they become more confident? Will less confidence lead to less spending?<\/p>\n\n\n\n

Now back to inflation. How did a starter home become $250k, a new car $50k+, a trip to the grocery store requires more cash than most should have on them at any one time. Will spending the equivalent of a car payment to fill up the family gas guzzling SUV make millennials more confident?<\/p>\n\n\n\n

Importantly, remember millennials do care about others. They care about society. They care how others perceive them. That\u2019s why they\u2019ve bought into EV\u2019s, universal healthcare, and \u201cfree\u201d college because we were taught it\u2019s best to look at the big picture. And as a millennial, we\u2019ve been accused of being free loading, selfish, trophy grabbers for decades. This is why millennials buy into these causes. The problem is\u2026 it\u2019s all fun and games until someone gets poked in the eye.<\/p>\n\n\n\n

Even if millennials never have to face the burden of inflation causing starvation, they will have to confront the declination of confidence caused by economic uncertainty. This will squelch their spending and consumption habits at the very time America needs them to open their wallets.
<\/p>\n\n\n\n

I\u2019m oversimplifying here, but think about it, our fictitiously spending fueled economy dates back to WWII. For all the right reasons, the US enters the war and our manufacturing plants, companies, and workers are thrown into full throttle. Next, in the 1980\u2019s we have a shift in retirement plans from pensions to 401k\u2019s. For the first time in American history, the average worker, now has money in the market (401k). They are rewarded for the market gains. Gains in the markets make them feel more WEALTHY, and with this new \u201cwealth\u201d comes more confidence.<\/p>\n\n\n\n

As previously promised, more confidence leads to more consumption (spending). Then we have the transition from lay-away (pain before pleasure) to easy credit (pleasure before pain). Couple this with a twenty-year trend of decreasing interest rates, lower rates feel better than higher rates, which leads to more confidence, and you get the same troubling environment as John Hammond\u2019s Jurassic Park.<\/p>\n\n\n\n

Boom. The water in the glass starts to ripple, and instead of seeing a T-Rex in our rear-view mirror we get the tech-bubble burst of the late 90\u2019s. Lower interest rates even further (or bio-genetically engineer bigger, badder, dinos) and you then get the housing bubble. Pour trillions fo dollars into the markets, and then to people (Great Recession and Covid) and you see our economic gains are spurred through spending of money we don\u2019t have.<\/p>\n\n\n\n

Can the government continue to print money? Probably. How long? That\u2019s the better question. As the famous economist Herbert Stein put it, \u201cthings that can\u2019t go on forever, don\u2019t.\u201d<\/p>\n\n\n\n

In conclusion, we\u2019ve built your plan for this outcome and for shifts in economic trends. We didn\u2019t focus on growth, we focused on income. To beat the dead bludgeoned horse one more time, it\u2019d be like Jurassic Park focusing on creating once-in-a-lifetime experience rather than a breeding man, I mean people, eating monsters or as we millennials like to call them, large care bears with teeth.<\/p>\n\n\n\n

Yours Truly,<\/p>\n\n\n\n

Michael Jay Markey, Jr.<\/p>\n\n\n\n

Hopefully this message alleviated any concerns you had about these uncertain times. If not, please feel free to schedule a call with myself or Dale. <\/p>\n\n\n\n

[1]<\/a> This doesn\u2019t mean boomers are necessarily spending less, rather according to the Bureau of Labor statistics (2019) those 65-74 are spending, on average, nearly 20% less than those ages 45-54, and those 75+ are spending nearly 38% less.<\/p>\n\n\n\n

RADIO: Fireproof Your Finances<\/strong>
Heard Weekly on 102.9FM, 97.5FM, 98.7FM, 1034 AM, and 1570AM
Click here for past episodes<\/a><\/p>\n\n\n\n

AUTHOR: Fireproof Your Retirement, 2014,; and “Seriously Ramsey” The Register<\/strong>
Click here to read Fireproof Your Retirement online edition<\/a><\/p>\n\n\n\n

Legacy Financial Network\/LFN Advisors Inc.
<\/strong>700 Terrace Point Dr., Ste 325
Muskegon, MI 49440
PH: 616-589-4004
FX: 888-900-9135
www.legacyfinancialnetwork.com<\/p>\n\n\n\n

Advisory services offered through LFN Advisors, Inc. Insurance services offered through Legacy Financial Network. The aforementioned are affiliated companies.<\/em><\/p>\n\n\n\n

LFN Advisors, Inc. outgoing and incoming e-mails are electronically archived and subject to review and\/or disclosure to someone other than the recipient. We cannot accept requests for securities transactions or other similar instructions through e-mail. We cannot ensure the security of information e-mailed over the Internet, so you should be careful when transmitting confidential information such as account numbers and security holdings. If the reader of this message is not the intended recipient, or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in error, please notify us immediately by replying to this message and deleting it from your computer. Legacy Financial Network, 700 Terrace Point Dr, Suite 4A, Muskegon, MI 49440 United States<\/em><\/p>\n\n\n\n

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