The Financial Flash

At-a-glance News for Advisors

Data on U.S. investors with $1 million in investable assets from a survey conducted by Boston-based Natixis Investment Managers (IM) suggests that wealthier individuals are preoccupied with their eventual ability to retire comfortably -- even with $1 million or more in assets. The survey noted that 2022 is proving a difficult year for many to retire. “Americans have suffered steep losses in their 401(k)s and other retirement vehicles this year, calling into question underlying assumptions about saving, spending and investing,” according to the Natixis Center for Investment Insight. “Even before the turmoil of this year, high-net-worth individuals were concerned about their ability to retire securely.” More than a third (35%) of millionaires believe “it will take a miracle” to achieve a secure retirement, while almost half (42%) of high-net-worth individuals are so worried about retirement security that they avoid thinking about it all together.

With most small business owners looking to cut costs, roughly half are considering axing insurance. Predictably, major insurer Nationwide cautions that could be “a dangerous business move.” According to the latest survey from Columbus-headquartered Nationwide Agency Forward, 70% of small business owners expect a recession within the next 6 months, but significantly fewer feel prepared to weather it. More than half are considering where they can cut costs, and some business owners are contemplating changes that could affect the jobs market. Only 27% of small business owners say current business conditions are strong in the US, and just over a third feel similarly about their own region or city (36%). The survey also shed light on how business owners have been affected by recent economic instability:

• 6 in 10 small business owners say inflation and rising costs have negatively affected them.

• 35% say they have been negatively impacted by interest rate hikes.

• Almost 4 in 10 (39%) say their business revenue has decreased over the past six months, with most declines being as high as 30%.

The Conference Board Leading Economic Index® (LEI) for the U.S. decreased by 0.4% in September 2022 to 115.9 (2016=100), after remaining unchanged in August. The LEI is down 2.8% over the six-month period between March and September 2022, a reversal from its 1.4% growth over the previous six months. “The US LEI fell again in September and its persistent downward trajectory in recent months suggests a recession is increasingly likely before year-end,” said Ataman Ozyildirim, senior director, Economics, The Conference Board. “The six-month growth rate of the LEI fell deeper into negative territory in September, and weaknesses among the leading indicators were widespread,” he added in a statement released October 20. “Amid high inflation, slowing labor markets, rising interest rates, and tighter credit conditions, The Conference Board forecasts real (U.S.) GDP growth will be 1.5 percent year-over-year in 2022, before slowing further in the first half of next year.”

A majority of business owners expect a recession to affect their operations in the coming months but remain optimistic about their ability to navigate the changing environment, according to the Q4 2022 CBIZ Main Street Index. The index from CBIZ Inc., the Cleveland-based provider of financial, insurance and advisory services takes the pulse of and gauges the outlook for small and mid-sized businesses (SMBs). “The increase of employee turnover is forcing SMBs to take more action to retain their talent,” said Anna Rathbun, chief investment officer of CBIZ Investment Advisory Services. “Our survey shows this is a common theme among small to mid-sized businesses and will likely persist despite possible layoffs in some sectors brought on by a recession.” The CBIZ Business Confidence Study, a weighted average of responses to the Index’s business confidence-focused questions, rose nearly seven points from the second to third quarter to a score of 67. The Index showed while four in five business owners expect a recession, 71% remain positive in their ability to respond to a downturn. Most businesses continue to combat multiple challenges brought on by the pandemic and labor market conditions, including 75% which experienced a staffing shortage of some kind. The Index was released October 18 after being conducted September 12-30 and after analyzing responses from more than 1,100 Main Street businesses with fewer than 100 employees in 27 industries across the U.S.

 

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