TSP Planning Report October 2022
- The G Fund rate for October 2022 increased to 4%. It was 3.375% in September, and 2.75% in August.
- The Fed Funds interest rate remains at 3.25%. It was 2.5% in August. In June in was 1.65%, and 0.9% in May. The Fed anticipates 1 more rate increase this year, in November.
- This month’s unemployment rate decreased back to 3.5% from 3.7%.
- PMI (Purchasing Managers Index) continued to expand (any reading above a score of 50 means expansion). This month’s reading came in the same as last month’s, 52.8, compared to August’s 52, July’s 53, and June’s 56.1.
- The S&P 500 (C Fund) decreased -9.21% in September, on the heels of -4.7% in August. However, as of this writing it has recovered some of it’s losses. YTD, the S&P 500 is down -18.6%
- A 1st estimate of Q3 GDP has come out, showing a growth of 2.6%. The 3rd estimate of Q2 GDP confirms a negative -.6% GDP. This is back-to-back quarters of negative GDP which means the American economy has entered a “recession.”
- America’s diesel supply is expected to run out in less than 25 days. If this happens, the forecasted result will be diminished production and manufacturing (which means diminished supply of goods, including foods), as well as diminished trucking and shipping capabilities, which will cause supply-chain issues (again), causing prices to rise (again).
- Adding to the cost of energy, OPEC+ decided to decrease the production of crude oil. This decrease in production means a decrease in supply, which will lead to a price spike.
- Parts of the US are already rationing energy access for residential properties. New England utilities have asked Biden to declare an emergency and solve the issue immediately.
- Oh, and speaking of diminished shipping and disrupting supply-chains, the rail union has rejected another labor deal. This may lead to a shutdown of the railways in parts of the country, further threatening access and price of goods.
- This week, a host of major employers – including Amazon, Google, Facebook, and Microsoft – forecasted slower growth and higher costs. This drove their stocks down by almost 10% each (Facebook actually dropped 25%, and Amazon by 20%).
- Major employers announcing massive layoffs.
- China’s Real Estate market is collapsing, leaving buyers underwater and many refusing the pay their loans – reminiscent of 2008’s credit crisis and great recession,
- In parts of Europe, energy prices have increased 1,000% – and they’re still rising!
- Protests of government over-reach have sprung up in Sri Lanka and the Netherlands.
- The British pound is steeply losing value, dropping 22% of its value in 6 months. This means the UK will experience serious loss of buying power when trying to buy international (and national) goods and services, putting even more pressure on the UK economy.
- In the US, mortgage rates are over 7.5%.
Anyone who has more than 5 years before drawing income from their TSP should consider taking a more aggressive posture going forward and use my aggressive portfolio’s below. If you are within 5 years of retirement, you should email me to get a more customized recommendation.