Winter Newsletter 2022 - Blog | NebraskaLand Bank | Personal & Business Banking
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Winter Newsletter 2022

An outlook for interest rates, national ranking, and HSA's

Message from Mike

I want to take the time again this Quarter to give you an update on the Economy and my outlook for interest rates moving forward.  I laid out to you last Quarter that there were two possible paths that the Economy might take depending upon the amount of government stimulus approved by Congress, the tax rate hikes used to pay for the stimulus, and the impact of the ongoing supply chain shortage. 

During the last Quarter, Congress did pass a bi-partisan infrastructure bill that included tax changes that were largely designed to impact very high income tax payers with incomes over $50 Million.  Capital Gains Taxes, Estate Taxes, and Income Tax Rates were generally unchanged from current tax laws.  This should provide stimulus to the construction trades, but will continue to put pressure on supply chains.  This will likely put more pressure on the rate of inflation which is currently at a 39 year high (6.8% year over year).  Additionally, the Producer Price Index (PPI) which measures wholesale prices (less food and energy) increased by .8% in the month of November, taking the annualize rate up to 9.6% (the highest annual rate ever measured).  This should put serious upward pressure on interest rates.  At this point, rates remain fairly stable, which is generally attributed to concerns that the Economy may slow down due to the supply chain issues, which have been compounded by the serious labor shortage.  Generally, low interest rates and strong demand for goods and services causes companies to grow and expand.  But if construction materials are in short supply (and high priced), and labor is tight (and expensive), many companies are slow to expand.  If this situation continues, the Economy could falter causing the Fed to delay their desire to raise interest rates. 

Even if the Economy grows at a slower rate, the growth in the rate of inflation will likely cause the FED to begin tightening causing rates to climb in 2022.  At some point, the FED cannot continue to ignore inflation if it continues to remain at elevated levels.  For budgeting purposes, I am projecting that the Federal Funds Rate will be adjusted upward by 25 basis points three times in 2022. 

This may be ambitious, but I do think that rates are postured to move higher given the current inflation rate. Keep in mind that high inflation rates reduce spending power if wage rates do not keep pace.  Meanwhile, rising wage rates increase the cost of goods as companies pass these cost on to the end consumer.  The other impact of a very high inflation rate is the impact on the “real” interest rate return.  The “real” interest rate return is the difference between the yield on investments less the rate of inflation.  Clearly, investors want to generate a “positive” return on their investment portfolio.  The difficulty in this environment is that the risks in the market today can also cause a greater loss of capital if the market reacts negatively. 

Congress is still discussing a second stimulus bill that would be much larger and almost totally be devoted to social spending.  This bill faces an uphill battle, but could ultimately get passed in some form.  Should this bill get passed the finish line, the size of the bill and the resulting income tax changes could certainly impact the inflation outlook and the resulting economic impact. 

In the end, I am a believer that interest rates are heading higher.  How much and when is still a moving target, but the stage is set. 

Thank you again for your ongoing support and for entrusting us to be your financial services provider.


NebraskaLand Bank ranked #5 in the Nation as Best Bank to Work for by American Banker. 

There are a lot of perks to working for NLB, such as a fully stocked break room with free fruit, veggies, and coffee, “No Pay” Thursdays with beer on tap (after hours), an amazing volunteer program, activities, and much more. While perks are nice, it’s not why we’re the best. We have the best people and leaders who believe in our culture.

For the third year in a row, we have been listed as one of the Best Banks to Work For and have climbed the list to number five out of 90 banks selected. American Banker and Best Companies Group recognizes and honors banks in the U.S. for outstanding employee satisfaction.

“This list calls attention to institutions that have gone above and beyond to invest in employees' personal and professional growth,” said Bonnie McGeer, executive editor of American Banker.

At NebraskaLand Bank our executive and management teams take employee goals to heart. Josh Sperle Business Banking Officer states, “I enjoy working with a team that is eager to help each other learn and grow, a leadership who is interested in their employees’ hopes and aspirations”.

Comm(unity) is the cornerstone of our culture and what truly brings us together. It means that we care deeply about doing our part to help the people, businesses, schools and organizations within the communities we serve succeed. Amy Jay our Internal Auditor says “The bank supports community service and volunteer hours, so you see a lot of our employees involved and active in the community; not because they are asked to, but because they want to. People genuinely care about one another and take care of each other”.

“Having a positive impact on the people that live in your community is a great feeling” said Michael Allison Business Banking Officer.

Determining the Best Banks to Work For involves a two-step process. The first step involves an evaluation of participating companies’ workplace policies, practices, and demographics. In the second step, employee surveys are conducted to directly assess the experiences and attitudes of individual employees with respect to their workplace. The combined scores determine the top banks and the final ranking.

To read our blog about “Best Bank” click here.

Health Savings Account

Do you have a high deductible health plan? If so, you may qualify for a Health Savings Account.  This account is a great way to earn interest while saving for qualified medical    expenses, tax-free! Call a Personal Banker for details!

*Health Savings Accounts are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties. State taxes may apply. Consult a tax adviser with questions.