Everyday consumers go to the grocery store and purchase eggs. Gross Domestic Product (GDP) tracks that purchase, as well as all the other purchases made by consumers. In our last article we wrote on GDP and how it is used to monitor the current economy by measuring the monetary value of final goods and services purchased by a final consumer. But this leaves out a huge piece of the economic picture. How did the eggs get to the grocery store? What happened, and more importantly, how much was spent, getting them on the store shelf? There is another tool that allows us to see deeper into the economy and gives a clearer picture of what’s really going on called Gross Output (GO).

Gross Output depicts a different narrative. It generates a deeper, more encompassing view of the economy, showing the central role that businesses’ purchasing and spending plays in the national income and economic health. GO not only includes the final sale of an item (GDP), but all the purchasing that takes place in between, meaning you can measure the economy at all stages of production. You can think of it like the difference between an x-ray, which shows the general internal map and structure, and a CT scan, which shows a more detailed picture of not just bones, but organs and tissues as well. GDP shows a basic overview, just like the x-ray, but the GO shows us deeper and more complex systems and functions.

GDP ignores business to business activity and supply chains, which is more than half the spending that takes place in our economy. This makes it seem like consumer spending makes up the majority of the economy, but consumers can’t consume unless there are products being made in the first place, and those products can’t be made without spending and

purchasing on a production and manufacturing level. Leaving out the supply chain is a huge omission; this is why the GO is so important to track. Imagine only tracking the purchase of eggs to determine the health of the economy, instead of factoring in the cost of keeping and feeding the chicken, the farm, the packaging plant, and the delivery truck.

Gross domestic product (GDP) showed 2.6% growth in the fourth quarter, but gross output (GO, which measures spending during all stages of production) only grew by 1% or less. GO and GDP don’t always move in the same direction or at the same rate. GO tends to drop more but recover quicker. However, studies have shown that whenever GO grows at a slower pace than GDP, it suggests a slowdown or recession is in the future.

All this isn’t to say that GDP doesn’t have a place or doesn’t have value. As Mark Skousen, PhD. explains, “GO is the ‘top line’ in national income accounting; GDP is the bottom line. GO and GDP are complementary but tell different stories.” Gross Output is another tool in our box that can help us better understand the current economy and help us see where the growth is happening.

In an effort to bring attention to the importance of teaching Americans, especially children, healthy financial habits, the U.S. Senate passed a resolution in 2003 designating April as Financial Literacy Month. The goal is to bring awareness to and teach the significance of financial literacy in our lives and help people understand their relationship with money. Many people grow up without being taught simple things like how to effectively budget, how to save and plan for retirement, the importance of managing debt, or how to invest in the stock market. While these concepts may seem simple, often, if one is not shown the first steps, it is difficult to take action.

Unfortunately, in spite of having endless information at our fingertips, many people, especially those belonging to and after the Millennial generations, are unprepared should they encounter a financial crisis. This month, I’d like to highlight some of the skills and components that help build financial literacy. As with most things, the earlier you start down the path of financial education, the better off you will be.

Budgeting

Budgeting might seem obvious, but knowing how to create and maintain even a simple budget is the first step to understanding your money. It helps you see how much you have and where it’s going. List your expenses, then list your income. Seeing where your money comes from and where it is going is crucial. If your outgoing money is more than your income, you need to make adjustments, otherwise you will become trapped in debt.

Saving

Saving money is a learned skill. It takes self-control, mindfulness, and practice. Understanding the importance of paying yourself first is one of the first steps to developing a good relationship with your money. Having an emergency fund that can cover three months’ expenses will protect you from debt and further money problems should something unexpected or problematic arise.

Investing

When you invest your money, you’re making your money work for you. There are many ways to invest your money. Many employers offer 401k options, but you can invest your money independently as well through mutual funds, ETFs, REITs, money market funds, etc. When investing in the stock market it is helpful to use a professional. However, often many chose to go it alone by using a digital platform. It will take research and a little experience to learn which investments are right for you and what risks your investments are exposed to.

Debt

The best way to handle debt is to never get into debt in the first place. However, that’s not always possible. Some things, usually, require debt, like purchasing a car, a house, or paying for higher education. However, when it comes to the day to day wants and needs, it’s important to set money aside. A good principle is to never go into debt for a liability. If you’re going to use credit, use it to invest in an asset. Student loans are an investment in education, which is something that you carry with you throughout your life; enhancing it and leading to greater opportunities. Therefore, it is an asset. On the other hand things like a vacation or even a box of donuts, (either will be gone within a few days) once the experience is over it no longer serves you. Those things become liabilities if purchased with credit. The goal is to keep your liabilities as close to zero as possible.

Your financial goals should include striving to develop skills and gaining knowledge that will allow you to make informed and effective decisions. This process is a lifelong journey. Education is the key to success when it comes to your money. If there is an area of finance that you don’t understand, embrace it and learn all that you can. Find trusted resources available online or a trusted financial expert to support you in your efforts.

Inflation is high, money is tight; how can one be expected to put money away into savings? Sometimes it takes a little bit of creativity and thinking outside the box. Now is always the right time to build up your cash reserve.

We’ve all heard the go-to “how to save more money” ideas. Things like, pay off your credit cards, pay with cash, minimize spending, limit or cut down on your subscriptions, use coupons, etc. Those are all really good ideas, but how do you make all that happen? Some of the best advice is to be mindful of what you’re spending and pay more attention to what you’re putting in your shopping cart. Think about what you really need.

One idea is to schedule “no spend days” each month. These are days that, barring an emergency, you don’t spend any money. To make this work you need to be mindful of when you pay your bills. Start with 8-10 no spend days, and as you become more mindful of your spending, try increasing those to 15-20. Eventually you might want to go as far as having a “no spend month” (with the exception of regular bills).

Create a “spending board (or file).” This is where you drop pictures or links to things you want to buy. If you find yourself browsing on a no spend day, put it on your spending board for later. By tapping the breaks on spending, it gives you time to think about the purchase. As you revisit your board you may find yourself deleting things you don’t actually need or want. That’s money saved!

Try the $5 dollar saving trick. Every time you receive a five dollar bill put it into a savings envelope. This could be change from a purchase or money given to you. You’ll be amazed how quickly it all adds up. This trick can also be done with change. All those loose coins can go into a jar to be cashed out at a later time. Another version of this idea is to pull cash out when using your debit card at the store. Whatever you pull out can be put directly into your saving envelope.

Clearly, one of the best ways to have more money is to simply limit how much you’re spending. Our last idea is to start a money-saving hobby or skill. This could be learning to cook your favorite restaurant meals instead of paying to eat out or learning to sew in order to repair and maintain some of your favorite outfits. Learning how to build or fix things around the house means you don’t have to hire someone to do it for you.

As you become more mindful of your spending (and saving) you’ll find bits of money here and there, more than you may have thought.

Photo by Kenny Eliason

It’s a pretty common practice nowadays, when searching for information, to turn to the internet for answers. Thrown into the mix of every internet search is a slurry of social media platforms, each coming with their own influencers.

There was a huge rise in the number of financial influencers during the 2020 lockdown. During this time people were stuck at home and worried about their finances. They turned to YouTube and other social media sources to learn more about how they could be financially stable during a very unstable time. Now, being called “finfluencers,” these social media influencers offer advice on investments, retirement, and many other aspects of personal finance.

It's becoming more and more common for influencers to take up the financial position, offering advice on the best ways to save money, plan your retirement, and which stocks to invest in. On the surface, the added voices of information and help seem like a good thing, many of them are truly giving beneficial advice. However, this is becoming a problematic situation.

One reason finfluencers are such a controversial topic is because the financial industry is one that is highly regulated for the safety and protection of clients and their money and interests. Online, it’s a different story. There are influencers all over the world and few global precedents to regulate finfluencers. Many popular finfluencers are not officially registered advisors, which has led to illicit practices.

On December 14, 2022 the Securities and Exchange Commission announced charges against eight people in a $100 million securities fraud in which the accused used social media platforms to manipulate exchange-traded stocks in a “pump and dump” scheme.

The North American Securities Administrators Association (NASAA) released an advisory statement August of 2022 stating, “Investors should keep in mind that finfluencers are not subject to the same regulations as licensed financial professionals and may have undisclosed conflicts of interest. Before you consider investing or acting on advice from a social media personality, make sure you understand all the ins and outs of the investment including all potential risks.”

This is not to say that all finfluencers are out to scam and steal your money. Some are licensed financial advisors providing valuable information using social media to better connect with clients and a greater population. But it is essential to remember that just because someone has a large following, multiple likes or shares, or even a verified check mark does not make them a properly licensed professional. They may not have the level of knowledge or ethical standards as a licensed financial advisor.

The final thing to remember is that finfluencers are speaking to a broad range of followers, they are not catering to your individual needs. They don’t know you personally nor have a relationship with you. To them, you’re just a follower. Finances are personal. If you want the best results, they should be handled in a way that reflects your own personal interests.

Photo by: Adem AY

Increasing worry from investors about the financial future can lead to what is called an “inverted yield curve.” An inverted yield curve is where investors pay more for short term bonds than long term, which indicates they do not have a great deal of confidence in long-term financial conditions. Historically, the last five U.S. recessions followed an inverted yield curve.

40-year highs in inflation and Federal Reserve rate hikes played havoc on bonds throughout 2022, sending short and long terms rates to levels not seen in years. Short-term rates remained higher than long-term rates at the end of 2022, indicating a continued inverted yield curve.

The 10-year Treasury note yield started 2022 at 1.52%, peaked at 4.25% on October 24th, and closed the year at 3.88%. The three-month Treasury bill rate, thanks to the Fed’s continuous increase of short-term interest rates to alleviate inflationary pressures, started the year at 0.06% and closed the year at 4.42%.

As of February 2023, the yield for a ten-year U.S. government bond was 3.82%, while the yield for a two-year bond was 4.6%. This again shows that bonds of longer maturities bear a lower yield, reflecting investor’s expectations for a decline in long-term interest rates. This will make long-term debt holders more open to risks under the uncertainty concerning the condition of financial market in the future.

Sources: Federal Reserve, U.S. Department of the Treasury and Statista Research Department.

I Am Your Life Policy,

You and I have similar purposes in this world.

It is your job to provide food, clothing, shelter, schooling, medicine, and sundry other things for your loved ones; you do this while I lie in your strong box.

I have faith and trust in you. Out of your earnings will come the cost of my upkeep. At times, I may appear to be worthless to you, but some day (and who knows when) you and I will change places.

When you are laid to rest, I will come alive and do your job. I will provide the food, clothing, shelter, schooling, medicine, and other things you are doing now. But, I don’t stop there, I will also take care of your estate taxes, final expenses, and all the other various expenses incurred when you leave. When your work and toil are done, mine will begin. Through me, your hands will carry on.

Whenever you feel the price you are paying for my upkeep is burdensome, remember that I will do more for you and your family than you ever can do for me.

If you do your part, I will do mine,

Sincerely yours,

Your Policy

-Author Unknown

Photo by Towfiqu barbhuiya

As the cost of energy continues to climb, many believe the current energy crisis will help push green energy into the leading role of energy production, but is that possible or even responsible? Often when discussing renewable “green” energy people only refer to the actual output, they do not include the manufacturing, transporting, or waste aspects.

As gas prices increased, people started to consider the benefits of electric cars. We’re told that they are more economical, cheaper to run, and that they are better for the environment. However, an independent study done by Anderson Economic found that, contrary to most information provided, it can actually cost more to drive an electric car; with the increasing cost of electricity it’s going to become more and more expensive to charge your electric vehicle.

The batters for EVs are also controversial. Not only are they expensive to replace, typically costing between $5,000 and $9,000, but the impact of mining and producing the batteries brings in to question just how “green” they are. There are several environmental impacts of mining battery components, like lithium, cobalt, and nickel. These operations strain the local agriculture and disrupt ecosystems. And while the components of EV batteries are highly recyclable, only about 5% actually end up being recycled, leaving the other 95% as very un-green waste.

Solar panels have also become very popular recently. As with EV batteries, solar panels are a manufactured product which have an environmental impact, including the chemicals used, the emissions involved in transporting the product, and other factors.

At best solar panels last about 40 years, so what happens once they’re spent? They end up in landfills, leaching toxic chemicals, potentially contaminating ground water. This is especially true in third world countries where much of this hazard waste is sent. A study published in Harvard Business Review found that waste produced by solar panels will make electricity from solar panels four times more expensive than the world’s leading energy analysts thought. Now that energy costs are so high people are being told solar will save them money, especially with the government subsidies. However, in the U.S. we pay one-quarter of the cost of solar through taxes. And when you purchase solar panels it takes years to break even.

As mentioned with batteries, very few panels are ever recycled. The cost to recycle is 10 to 30 times more than to send the panels to the landfill.

It's not just solar panels filling up our landfills. More than 720,000 tons worth of wind turbines will end up in U.S. landfills over the next 20 years. While wind farms have become an important way to generate electricity in “off-grid” areas, there are still serious draw backs.

Wind energy only works when there is wind. This leaves a pretty big gap in production when the wind dies down. They also freeze over and can’t operate in severe weather. When the turbines are in operation the blades rotate at high speeds, killing many flying creatures. The U.S. Fish and wildlife Service estimate that there are between 140,000 and 500,000 birds killed by wind turbines every year. This can seriously impact ecosystems.

While the operating cost of turbines is low, the manufacturing, installation, and transportation of wind turbines, as well as creating the infrastructure is a hefty investment. It typically takes 10-20 years to break even. The initial setup also requires large machinery, which operates on fossil fuels. Some windfarms require clearing before installation can take place, this means cutting down trees. This poses an additional issue, when the land is cleared there is nothing holding the soil in place and results in erosion.

Renewable energy technology is more expensive than traditional fossil fuel generation. Wind, water, and sunshine might be renewable, but they are also inconsistent, and when there isn’t enough supply, something needs to fill the gaps.

Photo 1 by Markus Spiske

Photo 2 by Matt Artz

There are myriad ways to spend an hour. The time can be spent working, in a leisurely way, or even sleeping. What we do in that hour gives it value. Because each of us has only 24 hours in a day, what we do with that time determines the worth of each hour. Knowing our time has value can change our perception of how we value other things. In order to understand the true value of something, we need to be able to see the value of our time.

In spite of inflation, one hour of labor today translates into far more goods or services than at any other point in history. When we can factor in the “time price” (how long you have to work in order to purchase something) we begin to understand a good’s true value. Giving things a time price and understanding how long we must work for something also helps us to appreciate the value of our time and efforts. Knowing we have to work a set amount of time to purchase something (working 4-5 hours to pay for a family night out) helps us determine it’s worth to us on a personal level. If you could only use your time, instead of money, to pay for things, would you still be willing to work a set amount of time for a particular item you want? If you would be unwilling to pay for something with your time, it might not have enough value to take up place in your life, or your budget.

Not everything has a monetary value, though. Being present for your child’s school play, piano recital, or soccer game, a friend’s wedding, or your grandparent’s anniversary won’t contribute to your financial gains, but it does give value to your time. By spending your time in this way you will be increasing the value of those relationships, which will then give back to you. Using your time to “show up” can also reveal to others where your priorities are and how you value the people and relationships in your life.

There’s also a need to take time for recreation, develop talents and hobbies, and just rest. Most of us have spent a good hour doing mindless scrolling on a screen, which in the end doesn’t really increase the value of our time. However, we gain more when our time is used doing things that increase our development mentally, emotionally, and physically. The way we choose to spend our personal time can help determine the quality of not just the time spent in the moment, but in all the hours that follow. It is always a good idea to invest in yourself, not just in retirement plans.

We’re constantly spending our time, exchanging it for money, goods, or maintenance, but there is a difference between spending time and giving your time. Another important way to add value to our time is to give it to others without an expectation of receiving anything in return. Using your time to sit with a grandparent, serving your community or church, or listening to a friend in a time of need, all these things and more, help others and increase the worth of your and their time. When we give of our time its value multiples.

So, what is your hour worth?

Photo by Andrik Langfield