Money Monday with Brian James

Episode Transcript

Speaker 1 (00:00):
Down the kind of thing I need to know the

(00:02):
weather in traffic.

Speaker 2 (00:03):
Listen and you'll know a fun fifty five krs The
talk station eight'll five fifty five kr ce DE Talk Station,
Happy Monday. Thanks to all We're financial for loaning out
Brian James Talk Money Matters. It's time for Money Monday
with Brian James. Welcome back, Brian, Hope you had a
wonderful weekend. Just ignore the Bengals.

Speaker 3 (00:23):
Yeah.

Speaker 1 (00:25):
We usually start with sports only, but I'm lost. I'm
just kind of wander I don't know what.

Speaker 3 (00:28):
How do we kick this off here today? Yeah?

Speaker 2 (00:30):
Did you have any did you have any hope with
the so called late game rally? I mean, oh my god,
the Bengals just got a touchdown. They're going to think
they had like three minutes left in the game. My
wife looked at me, she goes like, they're gonna be
able to come back from this.

Speaker 1 (00:41):
Wow, the Bengals have figured out to prevent defense and
we're able to score twice when they were down by
four scores.

Speaker 3 (00:46):
Yeah, somehow that's not exciting.

Speaker 2 (00:48):
And thank god the opposing team does commit some penalties
resulting in or nearing to our benefit. Otherwise, you know,
you don't even have a glimmer of hope anyway, Brian James.

Speaker 3 (00:56):
Who day, Brian Woday? Is what we're really trying to
say here? It is? It is all right now.

Speaker 2 (01:01):
I'm looking at the stall at the front of the
Wall Street Jonal right now, Dal Jones futures up a scos,
SMP up a scosh. Nasdaq futures up a scosh. Looks
like everybody's ignoring the government shutdown. I guess it doesn't
impact the stock market, or does it, Brian James.

Speaker 1 (01:16):
Well, and any headline like that is you can't say
it doesn't have an impact, because these are things that
do trickle down eventually, but these aren't immediate impact. We've
had shutdowns, shutdowns before. This is not a new thing.
It's just a temper tantrum that happens pretty regularly, like clockwork.
Once we get in certain political situations. We got to
run the football back and forth. But no, this is

(01:38):
not something we're overly concerned about having a major major
impact on the overall government so that the overall stock market.

Speaker 2 (01:46):
Rather.

Speaker 1 (01:46):
The longest shutdown we ever had was in twenty eighteen,
and that lasted about thirty five days. The rest of
them average about five to seven days. So who knows
where we're going to be. We're already several days into
this one, and it doesn't seem to be any much
willingness to come to the table. But it does not
benefit anyone to permanently shut down the government. That doesn't
help either side, no matter what, where which ASL your
or which side of the ASL you're on.

Speaker 3 (02:06):
But so the anticipation is that eventually.

Speaker 1 (02:09):
We're going to sort ourselves out and come to some
kind of begrudging agreement and move on with our lives.

Speaker 2 (02:13):
Well, I've seen the cost of the government shutdown translated
into like impact on the economy that grow GDP like
fifteen billion dollars a week. I mean, part of me
wants to suggest that I did earlier in the program
that well, you know, there's the make work that the
government creates. In other words, you know, they they create
opportunities and create new businesses from a whole cloth. I mean,

(02:38):
you tell people you have to capture carbon, and next
thing you know, there's a whole bunch of businesses popping
up that are serving the purpose of capturing carbon, which
wasn't even an issue five minutes prior, so they do
impact what we do and how we live our lives.
Brian I was arguing about the tax code. How many
accountants are employed because the tax code is so blank
and complicated.

Speaker 1 (02:58):
It was three presidential elections to go on that specific topic.
I believe that we were all going to be doing
them on index cards. He did kind of go away.

Speaker 3 (03:04):
It did.

Speaker 1 (03:05):
The Into It lobby had an awful lot to do
with that. Into It being the company behind TurboTax.

Speaker 2 (03:09):
There you go and an entire multi multi Can you
imagine how much impact of the gross domestic product if
you got rid of accountants and the need for them,
because you well turned the tax code into something that's
easy to do by yourself without any assistance.

Speaker 3 (03:22):
They can't do that.

Speaker 2 (03:23):
Oh my god, we all die.

Speaker 1 (03:25):
The federal government is the largest customer of everybody's business
on the face of the earth. It simply is, there's
just that much money that circulates through the United States
federal government. So yes, as these as we slow things down,
then you know, we have a lot of people who
are now unemployed because the departments were shut down. Some
of them are coming back to work because courts are
ruling that they shouldn't have been unemployed in the first place.

(03:47):
I'm referring, of course, the federal workers here just during
this year as we've shut things down, So yeah, there's
definitely an impact there. And so this government shut down
started on October first, and it is already silenced that
most sequential release of this month, that is the September
Employment report. So if this lasts for three more weeks,
the September CPI inflation numbers are also going to have

(04:07):
to be withheld, and the October labor survey is not
going to get announced either, because we don't do these
things anymore during a shutdown. So we're thinking this is
pretty much transitory. We've been through this before, and prior
episodes of shutdowns suggest that these furloughed workers will come
back with back pay.

Speaker 3 (04:23):
So that that is what has happened in the past.
So you're exactly correct.

Speaker 1 (04:26):
A call out if we're not doing things and that
means money is not circulating the way it normally does.

Speaker 3 (04:31):
That is absolutely true.

Speaker 1 (04:32):
But historically speaking, we've brought these workers back and given
them their backpay, so that should settle itself out well.

Speaker 2 (04:38):
And you know, I know, the blame game is being pointed,
and I think at least in so far as US
keeping continuing funding levels from last year's budget levels, those
were the Democrats numbers. That seems to be the right
step for the Republicans. Dude, we're giving you everything you
wanted last year, and we're going to continue that until
and here's my problem, we finish up the twelve appropriations
vill So both sides are blaming. They don't do their

(05:00):
damn job. They haven't done the twelve appropriations bills since
like nineteen ninety seven or something crazy like that, so
you know, damn all of them.

Speaker 1 (05:08):
Yeah, I completely agree. I think I think we've just
had a point of just just absolute dysfunction. The necessity
of moving forward will force a break at some point.
Somebody's going to have to blink because this is just
one gigantic game of chicken. We can't shut down the
federal government for months upon months or years upon years.
It simply isn't going to work that way, and it's
going to hurt everyone, which means nobody gets reelected.

Speaker 3 (05:30):
That's what we're doing right now. I think we're in
the phase of.

Speaker 1 (05:32):
This where we have to fight fight, fight, fight, fight,
so that and give no ground whatsoever so that we
will get reelected. We haven't hit the point yet where
voters demand, hey, get together and sort this stuff out
so we can all move on with our lives. Right now,
everybody is simply posturing themselves for their own re elections.

Speaker 2 (05:46):
Well, and going back to the word, eventually, the markets
will eventually start to react to this shutdown. Obviously it
hasn't happened yet. I don't know what they're going to
do this week. But assuming for the sake of discussion,
we have to look back to that longest government shutdown period.
How long did it take, if you recall, for the
markets to actually reflect the shutdown in the numbers.

Speaker 3 (06:08):
So it really wasn't that big of a deal.

Speaker 1 (06:10):
In back in twenty eighteen when the federal government shut down.

Speaker 3 (06:13):
For just a few weeks, well thirty five days or so,
it was.

Speaker 1 (06:17):
So that was the longest one in history, and it
did have a real impact, but it was pretty temporary.
So the shutdown started December twenty second of eighteen and
ended January twenty fifth of nineteen, and this was over,
we were already in a broader market sell off that
was happening due to trade tensions and federal rate hikes.
In December of twenty eighteen, that month the S and
P five hundred had dropped nearly ten percent, and that

(06:38):
was the worst December since the Great Depression.

Speaker 3 (06:40):
At that time. But that was before the actual shutdown, right.

Speaker 1 (06:43):
So by late January of twenty nineteen, when it was over,
the market had come back sharply.

Speaker 3 (06:47):
The S and P five hundred rebounded about eight percent.

Speaker 1 (06:49):
Within two weeks, and it just looked more it looked
at that time more like a temporary market swing. Where
we always talk about the market can handle bad news.
It loves good news. What it can't handle, what it
absolutely hates is no news. So while we're wondering exactly
what's going on, the market will wander and money will
find its way to less risky assets until we can

(07:09):
tell exactly what's coming, until we can kind of see
through the fog a little bit.

Speaker 2 (07:12):
So once the government shutdowns over that quote unquote threat
to the economy is alleviated and things returned to normal.
Once the government opens back up. Under the twenty nineteen law,
every federal employee is going to get their back pay.
They're not could be deprived to pay, so that's over with.
When we reflect back on all the government shutdowns that
we've lived through, and even knows that we haven't personally
lived through, we see that the world did not end

(07:33):
and everything kind of came back to status quo. So
there's no I mean, to the average my average listener,
they're like, screw it. I don't care that the government
shut down because it always goes back to the way
it was beforehand and nobody ultimately gets hurt.

Speaker 1 (07:48):
Yeah, and I am your average listener. I am my
own client, and that's the way I think about my
own family and my own dollars.

Speaker 3 (07:54):
There's nothing going on in.

Speaker 1 (07:55):
The headlines right now that causes me to say, you
know what, I really need to go deal with my
portfolio or something different, change my financial life around that.
That's just not the case. This is no fun to
go through, and it's gonna hurt.

Speaker 3 (08:05):
There's no way, there's no sacrifice that's gonna be made.

Speaker 1 (08:08):
So, for example, in that year, the estimate is that
by federal workers missing those paychecks, even though they got backpay,
that still pulled about about eleven billion dollars out of
the GDP that quarter, but about about eight billion of
it was recovered when those paychecks finally went out again,
meaning the net loss was three billion dollars worth of
economic activity. That is nothing when we talk about trillions.

(08:30):
So I'm not holding my breath that there's really gonna
be anything all that momentous. Don't run around and change
your four O one K based.

Speaker 3 (08:35):
On these headlines.

Speaker 2 (08:36):
Well, and I suppose it suggests to politicians who think
they're going to get some sort of leg up based
upon the government shutdown being someone else's fault. We don't
care enough out here about the government shutdown to make
that resonate as a political message. I know it's politics
brought out money, Brian, but that's kind of what I'm
concluding here.

Speaker 3 (08:55):
Yeah, I would. I would say that's the case.

Speaker 1 (08:56):
Now this drags on and on and on, then absolutely
that it will start to trickle through.

Speaker 3 (09:00):
That's when people are going to start to notice.

Speaker 1 (09:02):
But right now and then, I think the first people
place people would see that is in therefore in case,
because the market would start to say, you know what,
this has gone on too long. We're going to pull
back here a little bit. But that is not We're
nowhere near that stage right now.

Speaker 2 (09:12):
But we may be near the cost of living adjustment
and Social Security and maybe, just maybe this shutdown may
have an impact on snapping Wick benefits. Brian's going to
answer those two questions in the next segment stick around.
It's just shy of eight fifteen right now, and it's
opportunity for you to mention wolve Zimmer Heating and Cooling.
Who's been the trusted name any Monday with all the
financials Brian Jane financial planner he is, and someone who's

(09:33):
going to tell about this, tell us about this government
shutdown is going to impact social Security, is going to
impact SNAP and work benefits. Let's start with social Security.
The Social Security recipients are eligible for a nice sizable
cost of living adjustment. Unlike Joe Strecker, they get one,
but the Bureau of Labor Statistics has to do some
number crunching before that can happen. I guess the BLS
is kind of shut down during the shutdown, so we

(09:55):
aren't going to get the stats needed to do a
COLA adjustment.

Speaker 3 (09:58):
Yeah, go figure right, So as soon as as soon
as we need.

Speaker 1 (10:01):
The we need some new numbers here. We don't have
them because we did choose to not report them. Here
very recently, So this is good. So this shutdown that
began October first, that could delay the announcement of the
twenty twenty six Social Security COLA cost of living adjustments
that normally happens right in the middle of October.

Speaker 3 (10:17):
And like you said, it's a Bureau of Labor Statistics.

Speaker 1 (10:19):
They were told to suspend data collection until we can
sort things out, supposedly and the specifically for the September CPI.

Speaker 3 (10:27):
That's the last piece we needed.

Speaker 1 (10:29):
To finish off that COLA calculation. Now importantly, I want
to make sure that that nobody is hearing me saying
that checks aren't gonna go out.

Speaker 2 (10:35):
That's got anohing no, no, no, no no no, yeah, yeah,
very important qualification. You will get your Social Security check,
it just may not be increased for the cola. But
how much money. Let's just cut to the chase on
this one, Brian, because I saw the article that you
provided in connection with this. You know I seniors are
entitled to this. It's going to be delayed, It'll probably
come up eventually when the government opens back up. But

(10:57):
can you live without maybe fifty four dollars additional money
in your payment each month? Yeah?

Speaker 1 (11:02):
Let's recall that this this wasn't a whopper that was
coming anyway. So analysts had already been projecting about a
two point seven to two point eight percent increase in
Social Security, so it wasn't going to be a huge
change too. Now, now that's a lot for some people.
I don't mean to say that, no, no, no, every nickel counts.
But at the same time, this isn't going to put
somebody on the street instantly. It would be nice if
we could get our stuff together as a country and

(11:23):
figure out exactly how we're going to move forward on
these things. But I guess we're going to go through
some convulsions before we get there.

Speaker 2 (11:28):
But fundamentally the check will come. A question be how
much it is. So now moving over to some critical
service lease for some folks, the SNAP Supplemental Assistance Program
and WICK benefits. How about these because I know some
people are suggesting they're not going to go through, but
in other places I've read now they're going to continue,
just like sis A security.

Speaker 3 (11:49):
Yeah, so there's two different programs happening here.

Speaker 1 (11:51):
So there's SNAP and WICK is the one that's more
at risk because of the way it works. So WICK
stands for women, infants, and children, and that basically is
very specific to single women and children up to age five.
This is a discretionary program, so this means that it
has to be voted on yearly from Congress to stay funded.
So as soon as the government shuts down, it goes

(12:12):
away immediately. That could run out of funds within one
or two weeks according on this is from that's from
the White House's own budget office. That will affect food
assistants for about six million mothers and young children nationwide. Now,
the other one is SNAP. That's the Supplemental Nutritional Program
and all the different states. It's federal money, but the
states administer it. Some states have their own program called

(12:33):
something else. So for example, California calls SNAP, CalFresh, Ohio
simply chooses to call SNAP SNAP to keep it simple.
So October's payments, so these are EBT cards. You see
signs at the cash register reflecting EBT cards. That's the
SNAP program. October's payments were already loaded onto those EBT
debit cards, so it's not going to affect this month.
But if Congress doesn't act soon, then November's SNAP benefits

(12:55):
could be delayed.

Speaker 3 (12:56):
Or reduced.

Speaker 1 (12:56):
So if you're on Wick, then you might be you
might want to start paying attention to the headlines here.
If you're on Snap, you've got a few.

Speaker 2 (13:02):
More weeks, well that's fair enough. So ultimately we don't care.
In the real world, most people are not going to
be completely impacted by this, probably won't even realize the
government shut down until it opens back up again. You're
a little about your life so the way you went
about them before the government shut down, So that is.

Speaker 3 (13:19):
A true statement.

Speaker 1 (13:20):
Again again, I'm not seeing anything here that should cause
somebody out to run out there and go run their
lives differently, to make different decisions. These are simply headlines
as we go through, everybody getting their say in Congress,
and hopefully we will get through this sooner rather than later.

Speaker 2 (13:34):
Hey, real quick here in a completely different direction, the
catchup provision of four to one K that changed this year,
didn't it.

Speaker 1 (13:41):
Yeah, So there was a new rule put in place
to allow for more people to put in to put
in more money.

Speaker 3 (13:48):
So there's now the catch up.

Speaker 1 (13:49):
The way it always was was anybody over fifty could
put a little more into the program. That's currently an
extra seventy five hundred dollars if you're over fifty. So
that basic means that you can put in thirty one
thousand dollars if you're simply over fifty. That's not new,
that's been there for a while, right. The super catchup
this is for if you're between ages sixty and sixty three.

(14:09):
This is a part of Secure Act two point zero
basically says that you can put in another eleven two
hundred and fifty dollars on top of it.

Speaker 3 (14:18):
So that's the big change that came through there.

Speaker 2 (14:23):
I've always scratched my head over why there was a
maximum contribution to four oh one K in the program.
Is that so they ensure that we continue to spend
money in the economy as opposed to socket away for
our future.

Speaker 1 (14:34):
My best guess on that, Brian, is that, well, I mean,
I'm just not a guess. This is why because if
you're somebody who has that much cash flow and there
was no limit on it, then we would be sheltering
billions of dollars, if not trillions via four oh one
K retirement plans. So it's there to affect the super
wealthy from being able to benefit too much from tax
planning and starving the government of revenue that it needs.

Speaker 2 (14:56):
I think the latter point a little bit more, starving
the government of revenue it needs. Oh, we are financial planner,
will tell you to live within your means. At least
that'd be my guest. We don't have those at the
federal guide. Brian James. I had to take a cheap
shot at the federal governments reckless spending. Brian James. All
with financial appreciate them loading at you every Monday at
this time to talk money matters. And of course we
know there's that secret group of women who listen intently

(15:19):
every Monday. We're hanging on your words.

Speaker 1 (15:22):
We are going to we are going to do it
and say we got a listener request. We're going to
put a segment together on credit unions we're interested in
and some social Security updates. So look forward to that
in the near future.

Speaker 2 (15:31):
They are anxiously awaiting it. And good morning, ladies, even
though you do remain anonymous. Brian James. Thanks man, we'll
talk next month.