Well, the tariffs have finally had a big global impact. The US is now more certain than ever to be heading for an overdue recession, US stocks (which have been shining stars in the investment industry) are plummeting in value, and consumers are starting to (rightly) worry about the impact on their lives.
What’s going on?
Tariffs are taxes put on goods and services coming into a country.
The US has imposed an almost global1 10% tariff on all imports, which means that everything coming into the US became at least 10% more expensive yesterday, when the tariffs came into effect.
Some things are even more expensive, with more specific tariffs applying to particular goods (e.g. 25% on steel) and countries (the highest being on Vietnamese imports).
Why’s this affecting everything?
As always, it’s impossible to draw a direct line from one action to a specific impact. But what is clear is that these decisions are affecting business, consumer and investor confidence — and it’s the cumulative effect of these that determines the state of the economy.
A quick run down of these things, though:
Business: Costs for many businesses will go up, and their customers will be buying less from them. That means less money available to pay staff, meaning consumers are directly impacted.
Consumers: Knowing that their jobs (already precarious to begin with) are at risk, should be wanting to reduce how much they are borrowing (think credit cards, personal loans and mortgages), while also dealing with the increased cost of things on top of already high costs. This is assuming that people have money available to divert to paying down debt, and want to do so. Generally it’s not looking good.
Investor: And finally, investors are speculating on all of this. Most institutional (professional, large) investors will do well; they always do! Retail investors (people like us!) are best waiting out this storm, however long it takes. Not selling current holdings, and, if they want to invest, to diversify across countries and investment types.
It’s gonna be a rocky road ahead. But we all knew it was coming.
1. UK women’s incomes halve in year following divorce
It drops 50% compared with 30% for men.
Women are twice as likely to struggle to pay for essentials, such as food.
The comments are, as always, illuminating, very much devaluing any non-financial contributions being made to the marriage or family.
51% of divorces involve women who were financially reliant on their husbands during their marriage.
In 24% of cases, women were the main breadwinner
One of the key things to ensure during a divorce, is to ensure that assets are appropriately valued and divided. In many cases, pensions are massively undervalued because they’re valued at the current date, rather than the future value.
It’s why it’s worth paying for expertise to help navigate a generally horrible time and process.
2. Negative wealth is linked to lower wages and worse health in later life
Negative wealth is where debts are greater than assets. It means that what you owe is greater than what you have, so you basically have no net worth.
A third of 25-34 year olds in the UK have this — and there are, of course, massive regional differences. We’re talking almost half (47%) in Wales compared with 18% in London.
“A third of the people who turned to StepChange, the debt charity, for help last year were aged 25 to 34, according its chief client officer, Richard Lane, who said that was a “huge disparity” since people in that age bracket only make up 17% of the UK population.”
So why is this happening?
When you’re younger, you have fewer savings and investments (because you earn less, and because you haven’t had as much time to benefit from compound growth of investments)
If you’ve been in the workplace when your early career has been impacted by a pandemic, recession, lower wages etc, you’re starting with a disadvantage
You’re more likely to be a private renter, and things like getting married and having a child are going to have a huge impact on your finances
Plus, rising costs (seemingly all the time) mean that just the cost of keeping afloat is hard enough to manage
Two very interesting things to come out of the Fairness Foundation’s research:
omen with assets of more than £1,000 at 23 are significantly more likely to report “excellent” health later in life.
And anyone with financial assets is more likely to vote or volunteer.
3. Should I pay rent when my boyfriend owns the house?
He owns, she rents her own place. How can they approach moving in together?
The advice is to be a straightforward tenant.
But then, how to decide how much to pay in rent?
‘Either pay half the mortgage or a fair rental rate for a similar property — whichever is less’ - and then split all other living expenses. Sound advice!
If the relationship progresses further, then you can look to buying into the property. But if you aren’t ready to buy together, don’t jump the gun just because you’re ready to live together.
Of course, it’s possible you’ll be having conversations about the equality of splits separately, given different earning levels, but such is the complexity of this!
Links!
Possibly the most links ever.
Money
Your money
5 unexpected ways I make enough money to survive while ridiculously ill
No-buy challenges: Here’s what happens in your brain when you stop buying
Work
Business and industry
62% of Americans say Amazon is their top choice of brands they’d consider purchasing in the “online” category. What boycott?
Chips and cookies have become too expensive. Shoppers are buying less. As
observes, it makes DoorDash’s recent BNPL offering less laughable.How musicians make and manage their money. I’m endlessly fascinated by the music industry and recently learned that Steps were one of the few pop artists who actually did well financially, because they knew more about how everything worked.
The founder of a US fashion-tech company2 that had raised $530 million has been found to have gone rogue. She ‘misstated financial statements and falsified audit opinions’ and, a week before the story broke, was still fundraising, despite her board investigating her actions. Bold move.
Life
Literally just do things; there will never be a perfect time
“The older I get, the more I fall out of love with efficiency.”
Stoop coffee: How a simple idea transformed my neighbourhood. This is the story of how you can make change in your community. Also I spent a while confusing the writer
with , don’t make my mistake.“I don’t call a fucking plumber when my my taxes need to be done. Why are their three politicians on a TV show talking about what works in schools?” On the barely-baked idea for Adolescence to be shown in schools
The latest from the student zombie wars
Know someone who would enjoy this in their inbox on a Sunday morning?
Shocker, Russia is not on the list
Called CaaStle - clearly none of the raised money was going towards good branding advice.
Thank you for mentioning my piece about no-buy challenges!