Nike's Big Fail | Stewardship Concepts Financial Advisors

Happy Friday, everyone! I've been learning at the Tax Planning Summit in Arizona this week. I'm looking forward to improving our tax planning strategies for our clients. It was also great to catch up with some friends from GCU (my alma mater). Lopes up! Thank you for joining me today for two minutes on the economy, an interesting story, and a financial planning secret.

Economy – Will the Spending Spree Ever Stop?

The U.S. federal government is projected to end Fiscal Year 2024 with a budget deficit of $1.9 trillion, equivalent to 6.7% of GDP, marking one of the largest peacetime deficits in history without a major recession or war. Despite higher revenues, due to surging spending on net interest on federal debt, expanded health care programs, and "other" mandatory expenses, such as student loan forgiveness. Net interest costs have risen sharply, while Medicaid has grown faster than Medicare. The bottom line is that the U.S. faces significant structural budget challenges in the years ahead, particularly on the spending side. With low interest rates in recent years, the government was able to overlook these issues, but time is running out. Regardless of the outcome of the upcoming election, addressing the fiscal imbalance will likely become a primary policy focus for the next administration and beyond.

Interesting Story – Nike's Big Fail

Outgoing CEO John Donahoe took the helm in 2020 and bet big on direct-to-consumer. This set Nike on the wrong trajectory. Hoping to improve their profit margins by cutting out the middleman like Footlocker, they stopped offering shoes to the stores, hoping their brand loyalty would force customers to shop online at their store. But this isn't what happened. While Nike's sales decreased, HOKA, which essentially replaced them in physical stores, had some of their best years. Since 2020, their stock price has halved. But their stock jumped this past week in the hopes the new CEO will make a reversal to its tried and true growth drivers.

Financial Planning Secret – The Best Type of Account

As a financial advisor in Spokane, we invest our client's money in many different tax-advantaged accounts. A health savings account (HSA) is one type with the best tax savings. The reason why it's so great is because it reduces your income going into the account, invests and grows tax-free, and can be withdrawn tax-free. There are two catches. The withdrawals must be made to pay for medical expenses, and you must have a high-deductible health insurance plan to contribute to an HSA. But this shouldn't dissuade someone from funding an HSA. Most people will use 100% of their HSA because of the increasing medical costs later in life. Talk to your HR representative to see if you have a high-deductible health plan. The most a family can contribute to an HSA is $8,300.

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