Financial markers to be thankful for

Americans are entering this holiday season in decent financial shape generally. It doesn’t entirely feel that way, with rising inflation, labor shortages, container-ship bottlenecks and other stresses.

But the landscape is good and even improving in a lot of ways — some obvious, like the continuing economic expansion, and others more subtle. Here are some of the financial and investment markers that are benefitting many or most people.

Giving thanks for bank apps

When was the last time you worried about your bank’s website or other mobile capabilities? Probably not for a long time. If a recent survey of 2,200 people from the American Bankers Association is accurate, 99% of consumers rate their bank’s online or mobile aps as excellent, very good or good. It’s a rare reminder that nearly all Americans can agree on something.

Also, four in five respondents in the survey agreed that innovation and technological advancements in banking have helped to improve access to financial services. And more than half, 54%, said they have used more contactless payment services since the pandemic began. Such services include credit and debit cards as well as phone or mobile apps such as PayPal, Cash App, Venmo and Zelle.

“Consumers enjoy the convenience, speed and security of digital banking, and they are likely to continue using these channels even after the pandemic subsides,” said Robert Morgan, the

ABA’s senior vice president of innovation strategy.

Sighing relief for banks’ health, too

Another reason to give financial thanks reflects the health of the banking system. Anyone who questions that can think back to the Great Recession, which was worsened and prolonged by severe stress centered among finance and real estate companies.

Now, despite low interest rates that make lending less profitable, banks are flourishing. In the latest quarterly report released by the Federal Deposit Insurance Corp., banks earned an aggregate $70.4 billion, the second highest profit total ever. More significant for consumers, nearly 96% of banks are profitable and none failed in the latest quarter.

The FDIC cites only 51 of the nearly 5,000 banks that it monitors as having significant financial concerns. That’s down from 813 problem banks a decade earlier.

Credit unions are showing similar healthy trends, and the percentage of Americans outside the mainstream financial system — those considered unbanked or underbanked — has declined for most of the past decade.

Appreciating a steady stock market

The rebounding stock market, despite the pandemic and all the disruptions of the past year, is a fortunate development. Granted, not all Americans have a stake in the market, but rising wealth levels have helped to keep the economic recovery on track while, on a personal level, improving retirement preparedness and helping investors achieve other money goals. The current climate sure beats a pronounced bear decline. Since the pandemic low of March 2020, the broad market as measured by the Wilshire 5000 index is up around 115%.

The rally has come with little anxiety, too, with no drops or corrections of 10% or greater. With the seasonally tougher late-summer/early fall months now out of the way, and with a still-strong corporate profit outlook, the odds favor continuing momentum.

Unlike real estate, where high housing values have priced out many young adults and other potential buyers, there are no such barriers of entry to the stock market. Broadly diversified mutual funds and exchange traded funds can be purchased for a few thousand dollars if not less, and workplace 401(k) plans often provide matching-fund subsidies to encourage participation.

Recognizing that rates are still low

While higher home prices have made housing less affordable in many parts of the country, you can’t blame interest rates, which generally have remained subdued despite the continuing economic expansion, declining unemployment and rising inflation. The 10-year Treasury note, to which fixed mortgages generally are pegged, currently yields around 1.6% — almost exactly where it was six months ago.

The average 30-year mortgage in mid-November was hovering around 3%, below the level at the start of the year, according to the Federal Reserve Bank of St. Louis.

Meanwhile, consumers generally have improved their finances and pared credit card balances and other outstanding debts, helped by low rates and other factors. Delinquencies and bankruptcies have dropped considerably compared to prior years, and credit scores have improved.

All this might unravel if inflation continues to worsen and with stimulus payments finished, extended unemployment benefits a thing of the past and rent-eviction and other moratoriums winding down. But so far, the trends are favorable.

A nod to Social Security’s resilience

It might seem odd to include the Social Security retirement system as something for which to be thankful. After all, every year brings the exhaustion date of the system’s trust funds closer, and Congress has shown no serious resolve to do anything about that.

Yet Social Security continues to pay out benefits as promised. And even if the trust-fund exhaustion date arrives around 2035 as predicted with no improvements, the system won’t go bust. It will continue to pay benefits based on payroll taxes and other revenue collections at that time, probably equal to around 75% of promised payments.

A study by the Center for Retirement Research at Boston College found that media headlines about the trust fund’s depletion can fuel misperceptions about the system’s viability and influence people to make poor choices.

In the study, workers who read articles with more alarming headlines said they felt inclined to start claiming benefits earlier than those who viewed more measured headlines. Early claiming can be harmful if beneficiaries wind up locking in lower monthly payments.

“While (alarming) headlines do their job of attracting readers’ attention, they don’t reflect the fact that the payroll taxes paid by employers and employees will keep rolling in,” the center said.

Still, the center urged Congress to shore up the system — and sooner rather than later. at