• Inflation is dramatically better than it was two years ago, but that doesn’t mean it’s gone.
• Even though you’re likely still battling lingering inflation, the economy has performed well over the past two years. 
• There are things you can do to take advantage of the great economy, like securing higher pay and ensuring you’re getting the best Annual Percentage Yield (APY) possible on your savings.

If inflation has you feeling blue, don’t worry. The economy is doing great! Gross domestic product (GDP) is up. There are more jobs than people to fill them, and industrial production is higher than it was before the pandemic.

This means it’s a great time to look for a better-paying job and take advantage of high APYs on deposit accounts. These strategies can help you build your savings and career potential while cutting back on the negative impacts of inflation, which will hopefully continue to get lower.

Economic Indicators

While sentiment around the economy has been improving in recent months, that’s relative since it’s been in the gutter since we saw peak inflation in 2022. For a long time, the media asked, “Are we on the brink of a recession?”

Over the past couple of years, the answer has always been no, at least by the economic indicators traditionally used to measure recessions. Here are some of the metrics the National Bureau of Economic Research considers and where they stand today:

• GDP growth: 2.1% growth in Q2 of 2023 and 4.9% in Q3 of 2023.
• Unemployment: Currently at 3.7%, which is in the ‘healthy’ range between 3% and 5%.
• Nonfarm payroll employment: While acceleration has slowed over the past couple of months, it’s still well within the healthy range. Jobs in industries like manufacturing, health care, and government positions are up, while the retail market saw a slight contraction. 
• Real income less transfers: This has been on an upward trajectory since May 2023 and is the highest it’s been since the 1960s.
• Real personal consumption expenditures: These have been on a reasonably steady, upward trajectory since March 2021. 
• Industrial production: While the Industrial Production Index did dip a little in October, it wasn’t anything drastic or out of the norm. Even with the slight decrease, it still sits higher than it was before the pandemic in December 2019.

Inflation

The latest year-over-year inflation numbers are 3.4%. To give you an idea of where that puts us, inflation was at its highest of 9.1% in June 2022, and a healthy inflation level is around 2%. 

This means we’re doing much better than we were a couple of years ago. Nevertheless, just because things have improved overall doesn’t mean you’re not still seeing price hikes at the grocery store or having difficulty finding a truly affordable rental.

Job Market

Over the past couple of years, massive layoffs in the tech sector (which followed a pandemic-inspired hiring frenzy) have made major headlines. There have also been big stories about similar layoffs in the media and finance industries. 

While these primarily white-collar jobs have made a big splash in the news, they haven’t reflected the overall economy, which continues to have more jobs than workers. 

In recent months, there has been a decline in retail sector positions. Fortunately, other sectors, like government positions, manufacturing, private education, and health care, are still hiring en masse and are projected to remain strong sectors of the job market even if something unfavorable happens with the larger economy.

Take Advantage of the Hot Job Market

Knowing your industry is essential, but consider taking advantage of the hot job market! If you’ve been thinking about switching fields or want to move to a higher-paying position, this may be the time to do it.

By negotiating a raise or taking on a new role at a time when employers feel incentivized to pay, you’re locking in a little more financial security for yourself and your family.

Don’t forget that pay isn’t the only benefit you get from your employer. You’ll want to take advantage of any retirement account matching programs, student loan matching programs, or family leave policies offered in the employer benefits package.

Interest Rates

The Fed kept raising interest rates because they wanted to save the economy from going into a recession. Currently, it looks like they were successful.

High interest rates have a significant impact on you. For example, this is not the perfect time to take out a car loan because you’d be borrowing money. It’s also not an ideal environment for buying a home with a mortgage. 

However, it is a great time to take advantage of high annual percentage yields (APYs) on deposit products, including high-yield savings accounts, money market accounts, and certificates of deposit (CDs). With 4.00% to 6.00% APYs readily available, this is the best time since 2001 to get paid by your bank. 

As you work to achieve your goals, be sure to use the Payactiv app’s Goal Based Savings tool¹.

The Final Word

While the current inflation level isn’t ideal, you can offset some of its effects by taking advantage of high interest rates and the good job market.

You can also reduce your spending on things you don’t need so you can afford the things that matter to you. Cutting small purchases can really add up.

¹Goal-based saving is a set-aside account, and you will not receive interest or other earnings on the funds within the goal-based account.

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