What Can You Expect in America this Summer?
Dustin Wells EA, Tax Specialist
The summer of 2021 is still a few months away but it is fully incumbent upon myself and all of us at Strothman and Company to provide our clients as well as prospective clients a look ahead as to what you, an American taxpayer and/or business owner, can expect to see in the upcoming months ahead in this country. We do this so that, one – we can provide you with the information and more so, two – so you can better plan ahead, financially or otherwise in any way you see fit, for the upcoming years and hopefully, protect your business and family in the process.
Let’s run it down by issues by expected timing of what lies ahead in America for you this summer 2021.
More Stimulus. Just this week, March 10th, 2021, Congress passed another federal Covid stimulus bill at a cost of $2 Trillion dollars with additional $1,400 payments to be sent out to American taxpayers making less than $80,000 in tax year 2019 or 2020 depending on your most recent tax filings. This is now the third stimulus payment sent out by the federal government. A fourth and this will be a trend. If the economy dips again, as we predict here in coming months, you may see a fourth stimulus.
More Vaccinations. More and more Americans will choose to be/get vaccinated with the Covid-19 vaccine so we can achieve “herd immunity” more quickly and more so, so that we can all travel domestically and finally, get out of the house! Am I wrong? I’m ready to go – anywhere! Aren’t you? Only kidding, slightly. We can expect travel to Europe and other European countries will be limited domestically to Americans because Europe is behind in vaccinations and the majority populations will not be fully vaccinated by this summer. Of note, the only European country to develop a vaccine is Great Britain.
Higher gas prices and energy costs. Increasing gas prices combined with a substantial rise in gas and home utility costs will continue to rise due to the Biden administration issuing an executive order to stop the Keystone pipeline production. Moreover, due to higher taxes on gas and oil companies will directly impact all Americans who are filling up their gas tanks and paying to heat and cool their houses this year. As of March 10th, 2021, gas prices in Louisville, Kentucky have already reached close to $3 per gallon with California residents currently paying close to $5 per gallon for more reasons than we have time.
The Border. There is a border crisis emerging very quickly since February. Let’s look at it squarely and fairly. Since implementing a new southern-border policy, the Biden administration has issued direct orders to Homeland Security (I.C.E) to allow adult migrants to enter the US, legally or illegally, without direct arrest. This policy will hurt all Americans. Especially the ones living on or near the Mexican border in Texas and Arizona. It’s estimated that since February 2020 more than 3,000 un-accompanied children have crossed the border as well as more than 5,000 illegal adults have also crossed or have attempted to cross the border. Whether you like it or not, realize it or not, this will inevitably negatively affect all working, middle class Americans. It always does.
Lighter, side note. One of my favorite movies of all time is Field of Dreams. Coincidentally, I recently came across the hot dog scene. Ray and Terrance Mann are at Fenway Park. Ray asks Terrance a few questions while they walk down the ramp to the hot dog counter seemingly unknowingly to Mr. Mann and asks while walking, so… what do you want? Mr. Mann passionately responds by… well here, watch. Ditto! What a classic American cinema scene! I love it and love the sentiment. We must begin to think for ourselves! As a country, as a society, we need to open our eyes to the issues that actually affect our lives and our children’s lives and start thinking for ourselves more so than we ever have before because we, as a country, as a people, are surrounded in unprecedented freedom; however, it feels to me we are more preoccupied than ever before.
Higher Corporate Tax Rates. It’s now inevitable the Biden administration will raise corporate tax rates from the lower rate of 21% to 28%. This is basically a 7% increase on all consumers, customers of those same corporations and businesses who will be affected. These businesses are not going to allow their profits take a hit off the top from Uncle Sam at 7%! What’re they going to do? Well, let’s think about it… any answers come to mind immediately? Higher prices by 7% and what else? Bueller? Bueller? Anyone? No? Nothing? Job layoffs! These same corporations will begin to lay off workers and or reduce full-time workers to part-time to save on payroll costs so that they can stock pile cash to pay the higher taxes when the tax man cometh around March or April 2022. While attempting to hit up American corporations for an additional 7% in taxes the Biden administration is indirectly increasing taxes on every American who frequents these “corporations” aka Wal-Mart, Kroger, Whole Foods, Thornton’s, etc. With this, as documented here prior, you will see food, gas, utility and all other large corporation’s prices rise.
Collapse of the American news media. Cable news networks of both political persuasions, both left, right, conservative and progressive, are failing since Mr. Trump left office with network news ratings down more than 30% on average across the board. In summary, if American citizens, whether they are plugged into politics or not, cannot get open, honest reporting from either side of the TV news networks as it regards the United State federal government actions and policies, no matter what political party is in place, then the US citizenry will only become less and less honestly informed as we are currently. Additionally, of note, late night TV shows – Fallon, Colbert, Kimmel and others of the like are similarly dropping in the ratings significantly and they’re continuing to decline for many reasons I will not discuss or debate here today. I’ll just say this, I miss Carson! Mr. Carson was the best late night TV show host ever! In my opinion. Did you know you can watch old Johnny Carson TV shows on YouTube? It’s great! My favorites are the shows with Mr. Rickles aka Don Rickles aka Mr. Warmth! Mr. Warmth was the best! So, here’s to you Mr. Carson and Mr. Rickles! I know I’m not the only American who misses you dearly.
Economic uptick. This summer, around May and June, most US citizens will be vaccinated with the Covid-19 vaccine and most Americans will be looking to travel, see family and have some fun! Be prepared for a lot of Americans to “let off some steam” after 2020! With the summer weather bringing rising temperatures, Americans soon contributed to a minor but temporary economic boom in the next few month as more and more Americans are looking to get out of the house! Me included. This summer I plan travel more than usual and especially more than 2020 would bare. For me, it’s Florida! Great golf courses in and around the Orlando area and Destin’s fantastic beaches. Then, Tallahassee in the fall! I sincerely hope every single person reading this can take time to enjoy time away with family after 2020!
Stock market tumultuousness. It’s very likely we will have continued and larger increases and decreases in the stock market indexes throughout the rest of 2021 with the stock market likely increasing over the next few months due to consumer spending expected after more and more Americans get vaccinated and look to travel more and spend more money during those domestic travels planned. A fantastic resource for a month-to-month market summary is provided by Gilliam, Mease Advisors, LLC. You can find the latest market summary for March 2021 here. It’s an expedient monthly summary I use personally so I hope you find personal benefits from it as well. We are all in store for a wild, market ride this coming year! If you ever need a financial consultation, please feel free to reach out to me directly or Ryan Antepenko at Strothman Wealth Care. Ryan can set you up with a financial analysis and better understand what your specific needs and wants are for the upcoming years of investing or retirement.
So, in summary, all Americans – especially the readers of this newsletter – should begin to take financial and personal steps to protect themselves and their families with the projected economic uncertainty and economic decline, at least form my perspective. Take that for what it’s worth, if anything. The first few months of summer will see a substantial but temporary rise in a semi-economic boom with consumer spending increasing dramatically with more and more Americans traveling outside their homes for possibly the first time since 2020. However, after summer and into the fall, the negative effects from the increase in the corporate tax rates by 7% will inevitably cause all consumer prices to rise by at least 7% and all Americans will be paying more for food, gas, utilities, home costs, etc. These same corporations will then also look to cut costs even further as to sustain cash flows from the tax increase. Therefore, the tax increase of 7% or more ultimately raise consumer prices and more directly affect workers employed full time currently but may be moved to part-time or even worse laid off so that the business, the employer can possibly hang on for another 2-to-3 years of federal policies that will stifle business growth and ultimately costs all Americans more across the board. Therefore, knowing this, we should all resolve to spend more wisely on vacations and build up your emergency fund with three-to-six months of expenses on top of your emergency fund of at least $1,000. But if you are blessed to have a vacation this year, enjoy yourself as much as you can while you can. Then, when you return home, begin to prepare yourself, your business, your employees, if necessary, and more importantly, to me, prepare your family for what lies ahead economically in America for 2021.
“By failing to prepare, you are preparing to fail.” ~ Benjamin Franklin