A lot of things seem to be affecting the economy and the stock market recently, so we asked our financial expert Carl Carlson to help break it down for us.
Carlson told us three key things are impacting the stock market: Omicron, inflation and Manchin.
Omicron has likely been the biggest culprit driving the stock market down of late. The same thing happened when the Delta variant hit — the market went down by almost 10%, all because of the uncertainty surrounding possible death rates, lockdowns and new restrictions affecting economic growth.
This market decline made its way back and we hit all-time market highs by October, and again in the first half of December. This should be a short-lived pullback, especially if the variant continues to act more like the common cold.
Inflation is probably the worst thing of all for the low- and middle-income segment of America, according to Carlson. He told us it will have a long-term negative impact on all of our buying power and will impact the largest segment of working-class America, and not so much the wealthy.
"They need to get this fixed," Carlson said. "It is probably going to get worse. You can’t continue to print new money and not take the equal or close to equal amount out."
And as for Joe Manchin, that's all about President Biden’s Build Back Better Plan and where it may or may not have been headed.
If it is approved, Carlson thinks it will help the stock market in the near term but hurt the economy in the near and mid-term by causing more inflation, something we DO NOT NEED right now.
For now, Carlson suggests we shouldn’t be selling, we should be holding or possibly buying if you have extra cash. Because interest rates are very likely to be increasing, we shouldn’t be in bonds, especially long-term bonds, and we should be investing in growth stocks that can help our portfolios keep up with inflation or at least give us the best chance at it.