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NLB Newsletter

Fall 2022

Mike Jacobson
Message from Mike
Mike Jacobson, President & CEO

As we near the end of the Third Quarter, many questions remain regarding the state of the Economy.  The Federal Reserve continues to raise short-term interest rates to push borrowing rates higher.  This in turn serves to cause consumers to ration their spending as credit card rates and other consumer loan rates rise.  The desired outcome is to reduce consumer demand and allow supply to catch up with demand causing prices to decline.  Once this happens, the Fed would reduce interest rate to spur demand and allow the Economy to grow once again.  Although this is the traditional process for breaking inflation, this cycle may be different. 

In this cycle, demand has been fueled by significant stimulus due to the Pandemic.  Additionally, the lack of supply was caused by supply chain shutdowns that were imposed to help fight the spread of COVID.  This combination of events pushed the inflation rate to 40 year highs.  The debate now becomes how you effectively reverse inflation under these circumstances.  This becomes especially complicated when the Federal Government continues to pump more stimulus in to the Economy, which could offset the impact of raising interest rates.  Additionally, literally billions of dollars in unspent ARPA dollars remain unspent as well.   It will be imperative to get the supply chains open rapidly if this plan is to work. 

Meanwhile, it is possible that we could move in to a period of “stagflation” which is what happens when inflation remains high when the Economy stagnates. 

We are beginning to see initial indications that the Economy is beginning to slow and the rate of inflation is beginning to come down.  But so far the movements have been very small and we have a long road ahead.  The next couple of months will provide much more clarity and give us a better indication of what the Fed will do as they move forward. 

Meanwhile, expect the Fed to continue raising rates through yearend or until they see progress occurring on the inflation front.  However, once they reach their desired outcome, you can also expect rates to come down shortly thereafter.     

As always, I want to thank you for your loyalty and invite you to contact us if you have any questions or concerns.  


Have you thought about an HSA?

What is a Health Savings Account (HSA)?

An HSA is a tax-favored savings account for individuals and families covered by a high-deductible health plan (HDHP). Contributions to an HSA are tax-deductible and distributions are tax-free if used for qualified medical expenses.

Can anyone open an HSA?

No. In order to be eligible for an HSA, you must be younger than 65 years old and you must be covered by an HDHP on the first day of the month. You cannot be covered by any other health plan that is not an HDHP, and you cannot be eligible for Medicare benefits. You are also not eligible for an HSA if you can be claimed as a dependent on someone’s tax return. Continue reading about HSAs

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