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      The Fed Is Stuck Fighting the Last War

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      Mired in a battle to contain surging prices, the central bank also needs to be nimble enough for the economic downturns to come, our columnist says.The battle against inflation during the Biden years is almost behind us. But we’re in danger of learning the wrong lessons from it.The Federal Reserve, holding its last meeting of the year this coming week, has been fighting runaway consumer prices for nearly three years. So far, at least, it has managed an unusual feat: The rate of inflation has dropped sharply from its peak and there has been no recession.Yet the Fed is stuck in a difficult place. With prices still rising faster than the central bank’s 2 percent target, the incoming Trump administration will be hypersensitive about inflation, which was a decisive factor in the November elections. At the same time, the new administration’s policies on tariffs and immigration could set off another inflation surge. So the Fed must remain acutely vigilant on the inflation front.But it will have to keep experimenting, to be ready for the curve balls coming from future recessions. Some economists believe the Fed would gain flexibility if it reconsidered its 2 percent inflation target, though they say the central bank can’t take that step now because it is under too much pressure to preserve its own institutional independence.Still, a single-minded focus on inflation could leave the Fed without the right tools for coping with economic downturns ahead.The Fed’s predicament reminds me of a general who is endlessly fighting the last war — conscientiously dissecting the tactics of recent battles and failing to prepare properly for the next ones.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      It’s Not Too Late to Rein In Holiday Spending

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      Research suggests that you’ll spend less than you otherwise would by setting a strict budget — even if you go over the budget.Black Friday and Cyber Monday have come and gone. So you may think that setting limits on holiday spending is a lost cause, right?Not so, said Jamie L. Clark, a certified financial planner in Seattle. The December holidays are still weeks away. “It’s never too late to make a plan.”Chuck Howard, an associate professor of business administration at the University of Virginia’s Darden School of Business, said research suggests you’ll spend less by setting a holiday budget that’s “optimistically low.”That’s because even when compliance with budgets is weak, setting stricter, even somewhat unrealistic budgets tends to lead to lower spending, according to a study he helped write on the influence of budgeting on personal spending.Dr. Howard cited this example. Say you usually spend $500 a month dining out. You may think a realistic budget is $400 a month. But if you really want to cut back, you should set a budget of, say, $250. That way, if you spend $350, you’ve still spent much less than you used to.A tight holiday-spending limit serves as a reference point, he said, and even if you surpass it, you’ll probably spend less than if you had set a higher limit or hadn’t set a budget in the first place.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Has Social Media Advice Affected Your Finances? We Want to Hear From You.

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      If you have come across misleading personal finance advice online, tell us. We may include your experiences in an article.Social media and other platforms have helped make information on financial literacy, investing and trading more accessible than ever. Many accounts share information that can help people manage their money. But others are sharing advice that regulators say can be misleading.Some content creators might promote financial products like credit cards along with goods like vitamin supplements and electronics. Others — whether or not they have expertise — might lift the veil on their own financial journeys or share investment strategies. But sorting through the helpful from the deceptive can be a challenging task, especially when it comes to the vast landscape of social media. Financial regulators have warned people to be wary of advice from so-called fin-fluencers.I’m a New York Times reporter who writes about a broad range of topics, including the impact of digital trends on everyday life. I’ve written about sailors trading tips online over orca attacks and how savvy TikTok marketing revived a restaurant’s business. I’d like to hear from people who have lost money after following financial advice from someone online, whether that’s investing in a risky asset, signing up for a service or something else.I will read each submission and may use your contact information to follow up if I’m interested in learning more. I will not publish any details you share without contacting you and verifying your information. More

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      High-Yield Savings Accounts Are Still a Good Deal

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      Interest rates have been falling, but deposits are earning more than inflation.You’ve probably been discouraged to see the interest rate on your high-yield savings account fall during the past couple of months. But your money is still earning much more than it would in a traditional savings account — and more than inflation.Rates paid on cash in savings accounts have been dropping since the Federal Reserve began cutting its key interest rate in September as inflation cooled. The central bank cut rates again, by a quarter point, at its meeting this month, and another cut in December is seen as likely, though not certain because of a recent uptick in inflation.Banks are following the Fed’s lead in gradually reducing interest rates. Even so, the rates paid on federally insured high-yield savings accounts, many offered by banks that operate solely or mostly online, are still beating inflation, which was 2.6 percent on an annual basis in October.“High-yield savings accounts are still attractive relative to traditional savings accounts,” particularly for emergency or “rainy day” funds that savers want to be able to tap into quickly, said Alan Bazaar, chief executive and co-chief investment officer at Hollow Brook Wealth Management in Katonah, N.Y.Online banks were offering rates of 4 percent or higher this week, compared with a national average rate of just 0.56 percent for all types of savings accounts, according to the financial site Bankrate. If you put $5,000 in a savings account for a year at the average rate, you’d earn just $28, compared with about $200 with a high-yield account. (At some of the biggest national banks, which are offering just 0.01 percent, you’d end up with a measly 50 cents.)Just a few years ago, savers were getting 1 percent on their deposits at best, so 4 percent is nothing to scoff at, said Ted Rossman, a senior industry analyst at Bankrate. High-yield accounts can also be attractive for funds needed in the not-so-distant future — say, for a child heading to college or for retirees looking to set aside cash for living expenses.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      How Donald Trump’s Presidency Could Impact Retirement Rules

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      Readers had questions about individual retirement accounts, distributions and access to brokerage accounts if they moved away from the U.S. Here are some answers.Your retirement accounts may be the biggest component of your net worth. Or maybe those large balances are still only a goal, and you want to know if any changes coming in the next four years will help you get there — or get in your way.Of the 1,200 or so money-related questions we’ve received from readers in the days since the presidential election, many have been about retirement. We have some answers for what we know and context for what we don’t yet know. Most of them have nothing to do with Social Security; my colleague Tara Siegel Bernard answered questions about that program last week.But first, here’s an important caveat that is true in any administration, but especially in one like this: For things to change, President-elect Donald J. Trump has to want things to change, act on that desire and then succeed. If lawmakers are involved, they also have to have the desire, follow through and pass legislation.There will be plenty of noise, but in this particular category, it’s possible that not much of substance will look different four years from now.What did Mr. Trump say he wanted to change about individual retirement accounts or 401(k)s?Not much. Neither Mr. Trump’s campaign website nor the Republican Party platform that it pointed to said anything about I.R.A.s or workplace retirement accounts like 401(k)s, with one exception that probably wouldn’t affect many people.On his campaign website, Mr. Trump sounded off about environmental, social and governance, or E.S.G., funds and their place in workplace retirement plans. During his first term, the Labor Department issued a rule related to what sorts of funds an employer — which must act in employees’ best interest as a so-called fiduciary — can use in those plans.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Why States Are Offering Workers at Private Companies Access to I.R.A.s

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      With the plans, workers are automatically enrolled and contribute through payroll deductions. The goal is to help more Americans save for retirement.Traditional pensions are increasingly rare. About half of employees at private companies don’t have access to a retirement plan. And retirees themselves say they haven’t saved enough.That is why states have decided to step in and offer retirement accounts for private-sector employees, helping workers to save more and, new research shows, perhaps even spurring companies to offer their own workplace retirement plans.Automatic individual retirement account programs, known as “auto-I.R.A.s,” typically require private employers that don’t offer workplace retirement plans like 401(k)s to register for state-run plans.Workers are automatically enrolled in I.R.A.s, often with 3 to 5 percent of their income deducted from their paychecks, but can change the amount or opt out if they prefer. The employers — typically small businesses and nonprofits — provide access to payroll deductions to ease worker contributions, but don’t oversee the plan or pay fees.Auto-I.R.A.s are now available in 10 states, including New Jersey and Delaware, which started plans this summer, and soon will be in seven more, according to the Georgetown University Center for Retirement Initiatives. At the end of October, there were more than 930,000 accounts with $1.7 billion in savings for the eight plans for which data was available, according to the Georgetown center.Workers can, of course, open an I.R.A. on their own at a bank or brokerage. But few workers do so, perhaps because of inertia or because they are intimidated about making investment choices.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Older Workers to Get ‘Super’ 401(k) Catch-Up Contributions in 2025

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      Workers who are 60 to 63 will be able to put in up to $11,250 in extra contributions, if they can afford it.Will you be age 60 to 63 next year? Lucky you! You have the option to contribute several thousand dollars more to your workplace retirement plan.That’s if you can afford it, and many workers will find it’s a stretch.Federal tax law already allows people 50 and older to make extra contributions, above the annual deferral limit, to a 401(k) or similar employer retirement plan. This year and next, that standard “catch-up” contribution is $7,500.But starting next year, the catch-up contribution limit will be higher for people in their early 60s, as part of the federal Secure 2.0 tax law passed in 2022. They can contribute up to $11,250 next year — an additional $3,750 in catch-up contributions — beyond the general 2025 deferral limit of $23,500, the Internal Revenue Service said. That means they can potentially contribute up to $34,750 in total to a workplace retirement account.This additional contribution — sometimes called an “enhanced” or “super” catch-up option — is available to workers ages 60, 61, 62 and 63. You’re eligible if you reach that age during the calendar year, said Dan Snyder, director of personal financial planning for the American Institute of Certified Public Accountants. (Once savers turn 64, they’re no longer eligible for the extra savings but can contribute the standard catch-up amount.)The idea is to give people who are nearing retirement age, but are behind in savings, the chance to accumulate more money for their post-work lives. “This is an opportunity to make up for mistakes from the past,” said David John, senior strategic policy adviser at the AARP Public Policy Institute, which focuses on issues relevant to older Americans.Getting Americans to save more for retirement is a concern as the population ages, especially as the number of companies offering pensions dwindles. The typical household headed by people ages 55 to 64 has just $10,000 saved in a retirement account, according to an analysis of federal data by the Economic Policy Institute and the Schwartz Center for Economic Policy Analysis.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      They Barter and Trade in Rural America. How Will They Vote?

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      Many rural Americans engage in cashless barter systems to get food and firewood for heating and cooking. They value self-sufficiency, making them wary of government intervention.When Miki Shiverick needs firewood to heat her home, or help clearing the rusted appliances and vehicles from her property, she doesn’t go to a store or pay for services. Instead, she trades for it.For instance, preparing her land in Bergholz, Ohio for livestock over the last four years required hauling away piles of salvage, old tools and antiques from the rundown property she bought from the family of an old tinker. The place, with its barn house and five outbuildings, resembled a 12-acre junkyard.Ms. Shiverick, 56, found local scrappers willing to keep the profits from selling the rusted cars, campers, tractor parts, buried gas tanks and aluminum ingots at the local scrap yard. She also found woodsmen willing to clear trees for her in exchange for most of the wood.On this newly blank canvas, she dreams of creating a clean, natural retreat for her family with gardens that support wildlife and livestock, which she raises to promote food self-sufficiency and land stewardship.Bergholz is a rural town with a population of fewer than 600. For centuries, rural communities like Bergholz have operated in cashless barter systems built on mutual trust and neighborly relationships — a culture of self-sufficiency that has also shaped political views toward a kind of bootstrap conservatism.“People around here don’t do welfare, it’s not who we are,” Ms. Shiverick said.Ms. Shiverick bartered a bolt of linen with an Amish neighbor for a chicken coop.Rebecca Kiger for The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More