Happy Friday, everyone! Wyn, Amy and I attended our Spokane Financial Planning Assocation’s annual conference yesterday. We had one of the top industry speakers at our event, Michael Kitces. He provided invaluable insight into Roth conversions and providing massive value to clients. Thank you for joining me today for two minutes on the economy, an interesting story, and a financial planning secret.
Economy – Dodged Recession... For Now
As we approach third-quarter GDP reporting next Wednesday, less than a week before election day, the U.S. economy has yet to enter a recession. Despite tight monetary policy, its effects often lag, and massive budget deficits—recently reported at $1.832 trillion for Fiscal Year 2024, or 6.4% of GDP—continue to support a wide range of jobs. This deficit, unprecedented in peacetime with low unemployment, may temporarily offset the impact of tighter money. First Trust estimates third-quarter real GDP growth at an annualized 3.0%, continuing to be largely driven by consumer spending.
Interesting Story – Boeing Strike Woes
Boeing machinists have voted to reject a revised labor deal, extending a strike that has disrupted aircraft production for over a month. Nearly two-thirds of union members opposed the contract, which included a proposed 35% wage increase over four years and higher retirement contributions. Earlier, Boeing reported a $6.1 billion loss for the last quarter, marking its largest quarterly loss since 2020. The current trend of increasing power from employees continues to grow. There are record levels of new unions, and the number only increases. There is a huge power shift from employer to employee due to few available workers and rising wages.
Financial Planning Secret – 2025 Tax Brackets Are Here
The IRS has announced its 2025 inflation adjustments, with tax brackets increasing by a modest 2.8%, the smallest rise in recent years. This means that income thresholds to reach each higher bracket will be slightly higher next year, helping taxpayers keep pace with inflation. For example, the top tax rate of 37% will apply to incomes above $751,600 for married couples and $626,350 for individuals. The standard deduction will also increase $15,000 for individuals (up from $14,600) and $30,000 for married couples filing jointly (up from $29,200). The estate-tax exclusion rises to $13.99 million, and the gift-tax exclusion to $19,000. With the potential expiration of key provisions from the 2017 Tax Cuts and Jobs Act at the end of 2025, tax planning in Spokane will be especially crucial in the coming years.
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About the Author
Noah Schwab CFP® is a financial advisor in Spokane, Washington, specializing in helping couples with 401k five years from retirement.
- Fiduciary. No commission, no products
- Investment management and financial planning
