Key trends that will hit your wallet this year

Many times, the New Year kicks off with a huge financial hangover. But this year, we’re looking at even more reasons to keep an eye on our money.

All sorts of economic headwinds will influence everything from how much we pay for gas to how much we take home in our paychecks to the size of our tax refunds in 2019.

Here’s a look at some trends that could hit your wallet in the New Year:

GAS PRICES MAY RISE

Before you plan any cross-country trips for spring break, though, consider that gas prices are forecast to head higher in the weeks ahead.

Traditionally, gas prices can be at their lowest in January and sometimes that trend can continue into February, according to Nancy Cain, a spokeswoman for AAA Michigan.

“AAA Michigan forecasts prices will start and end the year low, with at least a 30-cent to 40-cent increase in between,” Cain said.

Prices generally go up in the spring when consumers start to take their vacations and refiners begin seasonal maintenance and switch to higher-cost, summer-blend gasoline.

Long-term forecasts are greatly influenced by shifts in the economy, global supply and demand, as well as tropical weather, such as a possible hurricane in the Gulf of Mexico.

“The party at the pump will likely wrap up in the next month or two,” DeHaan predicted.

The national average price could rise as much as $1 a gallon to a possible peak in May, according to GasBuddy.

If the U.S. economy continues to be strong, gas prices are expected to be headed higher. Yet economic jitters are increasingly causing worries.

If the economy stalls out or slows down in 2019, gas prices could go lower at some point after a spring bounce.

The trade war with China is one of the great unknowns for 2019.

Some maintain that both the United States and China have strong incentives to reach some sort of agreement, given the latest volatility in the U.S. stock market and the deepening economic slowdown in China.

If China and the United States reach some sort of a deal, the U.S. economy could get a boost and consumers would see a jolt in gas prices, DeHaan said.

“Without a deal, it could drag the economy down and keep gas prices lower,” he said.

DeHaan said consumers may need to “buckle up for the extra volatility.”

MINIMUM-WAGE RAISES

The minimum wage is going up in 20 states and dozens of cities in 2019. Some wage hikes went into effect on Jan. 1; others will be staggered through the year.

A key tip to remember, though, is that workers do have bargaining power in many areas because the labor market is very tight in most parts of the country and in most industries, according to Mark Zandi, chief economist for Moody’s Analytics.

One of the best ways for workers to tap into that bargaining power is to find another job.

“With another job offer in hand they could either take the new job, or if they like their current job, use it to ask for a bigger wage increase from their existing employer. There won’t be a better time to ask for a raise,” Zandi said.

TRADE TALKS WITH CHINA

Wall Street is increasingly focused on what might happen next with trade talks with China.

President Donald Trump on Wednesday told reporters that there was a “glitch” in the stock market in December. But he said stocks should rebound in the future after trade negotiations are settled. But your 401(k) isn’t all that’s at risk here.

The outcome of the trade war with China could have a great impact on the prices you pay at the mall, as well.

Talks between China and the United States are set to begin this week with all eyes focused an early March deadline for a truce set by Trump.

If no agreement is reached, tariffs are scheduled to rise to 25 percent from 10 percent on roughly $200 billion in Chinese goods, including many consumer products.

“Tariffs are taxes paid by American consumers and businesses,” Charles Freeman, U.S. Chamber of Commerce senior vice president for Asia, said in a statement.

“Tariffs also threaten to raise the price of everyday items, from textiles to tablet computers,” he said. “Having the U.S. and China at the negotiating table is encouraging.”

THINNER TAX REFUNDS

Dramatic changes in the tax rules will show up when we file our 2018 returns this year.

We’re looking at changes in individual tax rates as well as a sizable increase in the standard deduction that will cause some people to no longer itemize their deductions. Another key change for some families: State and local income tax deductions for individuals will be limited to $10,000 each tax year.

A key point: We started receiving more money in our paychecks last February because of changes in the payroll withholding tables under the new federal tax law.

The change in withholding tables might accurately reflect your tax bill. But some people might

not have had enough money withheld, so they could owe more in taxes than they’d typically expect when they file their 2018 returns. Or they might receive a much smaller tax refund.

About 30 million Americans—or 21 percent of taxpayers—are not withholding enough to cover the taxes due, according to a simulation listed in a report by the U.S. Government Accountability Office. GAO That’s up from 18 percent if the tax laws had not changed.

About 73 percent of taxpayers with wages are having too much withheld and would receive a refund, based on simulations run by the Treasury Department. That’s down from 76 percent if the tax laws had not changed.

For many families, it may be far safer not to bank on the same type of tax refund that they received earlier in 2018. And you might only truly understand where you stand once your tax return is completed in the spring.

MORTGAGE RATES WON’T BE PREDICTABLE

The average 30-year mortgage rate was hovering around 4.75 percent as 2018 drew to a close, up from 4.1 percent a year ago, according to Bankrate.com.

But mortgage rates have been trending down in recent weeks, along with the stock market, on worries about a possible economic slowdown.

In general, mortgage rates are expected to be volatile in 2019—possibly rising above 5.25 percent before falling sharply later in the year to 4.35 percent, according to Bankrate.com’s forecast.

“Mortgage rates are pulling back now because of the nervousness about economic growth so now is a good time to be looking for a mortgage,” said Greg McBride, chief financial analyst for Bankrate.com.

“I do expect that as worries subside in the next couple months—due to good economic news or a trade agreement with China—that mortgage rates will rebound,” McBride said.

“If the economy shows evidence of slowing later this year as I suspect, then mortgage rates will fall—but I don’t expect that until the last few months of the year.”