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Frequently Asked Question❓ 

Are some savings accounts safer than others?

Answer at the bottom of the newsletter

Small businesses ended 2024 strong. According to Bank of America's analysis of its client data, small business profitability in the last quarter of 2024 was stronger than the past two years, and small business optimism is at a six-year high, according to the National Federation of Independent Business (NFIB). Profitability, though growing, still looks to be lower than at the end of 2019.

Small businesses are on the hunt for quality workers. Hiring is 20% above what it was at the end of 2019. Payroll spending grew across all revenue levels, with businesses making over $1 million in revenue increasing their payrolls the most compared to last year. However, it's not easy to find good help. Quality of labor remains one of the highest concerns of business owners. Small businesses employ half the country, so this positive trend bodes well for the economy and presents opportunities for job seekers if corporate layoffs increase.

The government has a spending problem. The Congressional Budget Office (CBO) released projections of the nation's revenues and spending over the next decade. It expects the government to take on more debt than it ever has to fund its overspending. The CBO expects that federal debt held by the public will rise from 100% of the country's economic output in 2025 to 118% in 2035, surpassing previous records set after World War II.

This increase is mainly due to growing spending on programs like Social Security and Medicare and the rising cost of continued government borrowing. Although tax revenues are expected to grow, they aren't projected to keep pace with spending. The projections don't include the proposed tax changes by the new administration, which could shift revenue from income taxes to import taxes.

Rising interest rates force more of the federal budget toward interest payments on government borrowing, potentially reducing available funding for public services that people depend on. These budget issues might also press lawmakers to reduce federal benefits like Social Security and Medicare.

More new homes are coming for sale, giving buyers more choice and potential discounts. The Commerce Department reported that new single-family housing construction rose 3.3% last month to the highest level in 10 months. Building permits for single-family homes also increased by 1.6% to a rate of 992,000 units, signaling builders' optimism for future construction. Multi-family housing construction also surged.

Home builders expressed renewed optimism about the market after the election, but the enthusiasm has tempered. The National Association of Home Builders said sentiment rose only slightly in January as builders worried about materials getting more expensive due to import tariffs and mortgage rates continuing to increase due to concerns about government overspending. Climbing mortgage costs have deterred buyers and pushed builders to discount prices more often. If you're considering buying a new home, this uptick could mean more options are available, but be mindful of mortgage rates that could affect your budget.

💡 Answer to the Question:

Some savings accounts offer more safety than others, particularly those insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA). These accounts provide protection of up to $250,000 per depositor, per institution, in case of bank failure. This kind of account protection is pretty common, but it’s important to double-check. Uninsured deposits could be lost if a bank goes out of business.