Younger Workers Sour On The Economy
Bidenomics Is Working?
After three months of increases, the Conference Board's measure of consumer confidence declined in February. In March, the Rasmussen Reports Economic Index fell so much that four months of advances were undone. After rising for two months, the University of Michigan's consumer sentiment index decreased.
Over 51percent of registered voters in an Economist/YouGov study believe the economy is growing worse, up from 47.5 percent at the beginning of the year. The percentages of those who believe the economy is improving and those who say it is keeping roughly the same are both slightly lower than those found in the polls that were issued on the first of January.
Is Bidenomics Failing Younger Americans?
According to the most recent Economist/YouGov study, a significant majority of registered voters under 30 believe that the economy is growing worse. According to a March 4 poll, only 23% of younger voters thought the economy was improving, while 37.8% of them felt it was getting worse. This represents a significant change from a few weeks earlier, when the same poll revealed that 26.8 percent of respondents thought the economy was getting worse and 39.4 percent felt it was getting better.
You can't help but question if the movement among young voters is genuine because it is so pronounced. It will take time to find out. However, the decline in other indicators of consumer confidence raises the possibility that it's not just noise.
In the Economist/YouGov survey, respondents are also asked if their financial situation has improved from a year ago. Because it is less likely to be impacted by factors like the tone of media coverage, some analysts believe this is a better question to ask regarding the status of the economy. Even while a person may not be aware of the state of the national economy, they most likely have a good understanding of their individual circumstances.
This has also been worse lately. According to a survey conducted on March 4, 42.9 percent of respondents say their financial situation has gotten worse since the beginning of the year, up from 40.4 percent. Although it's not a significant movement, it does demonstrate that the Biden administration's encouragement isn't raising spirits.
The survey also reveals a sharp increase in voters' dissatisfaction among younger people. 34.2 percent of those under 30 indicated they were in a better place at the beginning of the year, while 17.7 percent said they were in a worse place. In the last survey, 23.7 percent indicated they were in a better place, while 34.3 percent said they were in a worse one.
What is the state of youth in America? For young workers, the job situation seems to have become worse in February. The rate of unemployment for workers aged 20 to 24 rose from 5.9 percent to 7.2 percent, while the rate for all workers grew from 3.7 percent to 3.9 percent. Since December 2022, that cohort's unemployment rate has never been higher. - Breitbart
A Plunder of 401(k) Accounts
According to the Wall Street Journal, "a record share of 401(k) account holders took early withdrawals from their accounts last year for financial emergencies." "A total of 3.6% of its plan members participated in it last year, up from 2.8% in 2022 and an average of roughly 2% prior to the pandemic."
When individuals face economic hardships, the temptation to tap into long-term savings like 401(k) accounts can be strong. Early withdrawals from these retirement savings accounts, however, come with significant implications that can affect an individual's financial security in the future. Firstly, taking money out of a 401(k) before reaching the age of 59 ½ typically incurs a 10% penalty on the amount withdrawn, in addition to the income taxes that must be paid on that distribution. This immediate financial hit reduces the effective amount received by the individual, making the cost of accessing these funds quite high.
Moreover, early withdrawals can have a profound impact on the long-term growth of retirement savings. The money taken out loses the potential compound interest it could have earned if it had remained invested. Over time, this can significantly reduce the size of the retirement nest egg, potentially delaying retirement or necessitating adjustments in retirement lifestyle.
What Does This Say About The Economy?
When individuals begin taking early withdrawals from their 401(k) accounts, it often signals a broader economic distress affecting the population. Such actions are usually driven by immediate financial needs that overshadow the long-term planning inherent to retirement savings. These early withdrawals may indicate that people are struggling with unemployment, high living costs, or unexpected financial emergencies that their current income or savings cannot cover.
The implications of this trend for the economy can be multifaceted. On the individual level, early withdrawals can lead to significant financial consequences, including taxes and penalties, and the depletion of future retirement funds. This, in turn, may increase the future burden on public social security systems and other safety nets as a larger segment of the population finds itself underprepared for retirement.
From a broader perspective, a widespread trend of early 401(k) withdrawals reflects economic instability and a decrease in consumer confidence. It suggests that the economic challenges faced are not just temporary setbacks but potentially systemic issues that could have lasting impacts on the economic well-being of a significant portion of the populace. This scenario underscores the importance of addressing the root causes of economic distress to prevent long-term financial insecurity among citizens.
