We are nearing the end of 2017 and with the job market creating new jobs in abundance, we are likely to see an interest rate hike. The economy is growing and in turn there will be a pickup in inflation (yawn) but if you know how to use all the factors to your advantage you can still come out on top. Let’s take a look at what’s hot and what’s not.

Hot – Savers
If and when the interest rates go up (U.S) the rates on your savings account will follow suit, in the UK economy, we are not expected to see a rise until 2018 thanks in part to Brexit (yipee). The cost of living is expected to continue to rise throughout this year with rising food costs the main factor.  

Not – borrowers
In the U.S anyone with a variable rate for credit cards, adjustable rate mortgages etc will feel the impact immediately, it will hit you hard. A credit card debt of $1000 would mean you would pay an extra $25 every year for each quarter point hike.

In terms of the UK market, spending has stagnated, consumers have reined in and as a result the UK economy has slowed. The UK banks have vowed to cut back on offering credit to consumers, evidence of this is obvious when looking at the amount of unsecured credit made available to households in the first quarter. They expect this trend to continue further into the second quarter of 2017.

Hot – Freelancing
In the US alone, the freelancing market grew to 55 Million Americans last year! That is around 35% of the total workforce. Crazy numbers! Also, there are many recruitment agencies start ups that solely focus on recruiting freelancers working from home or working remotely from anywhere in the world, watch this space. It is growing rapidly.

Freelancing in the UK is one of the fastest growing sectors and in a report done this time last year the turnover between 2008 and 2016 was roughly £119 Billion. That is more that the entire automotive sector. The freelancer in this report (source below) is defined “self – employed workers without employees working in a range of managerial, professional and technical occupations.” For a better understanding of the advantages of freelancing, click here.

Not – Full time jobs
Full time workers means that you’ll be on the company’s books all year round, whether its peak or off peak. With all companies looking to cut back costs, this is a cost they don’t need. Why should they pay you all year round when they only need you for a total of 6-7 months in a year, yes some jobs are needed for the company to function, but a majority of job roles are only needed when they are needed. This is where the massively growing freelancing job market is coming from, companies need things done and they don’t have the expertise to do it, they hire a freelancer and pay them for the project. That is the end of the mutually beneficial contract, it may get extended and if you do a good job they may ask for your services again. Companies hate committing to full time workers they don’t need and that trend will continue as more and more skilled freelancers become available looking for work.

Hot – Gigs
According to a study done by JP Morgan, seniors that are of retirement age are more reliant on alternative jobs that younger adults. Temporary gigs that help to prop up the pension help retirees deal with the rising inflation rates, the cost of living has become too much to just rely on one source of income(hint hint. Applies to us too! For ideas on how to create a secondary income, click here). Pension pots are shrinking, wage increases are stagnating and the older generation are looking to the ‘gig’ economy to supplement their retirement income.

 

Not – retiring
Experts say, you need around 65% of your income to retire comfortably, is that the case for the majority? Of course not. The retirement age has gone up over the last 10 years or so and now you can legally work until you are able, mentally and physically. However, do you really want to be hand to mouth for the twilight years of your life? You have inevitably worked so hard for 50+ years and you want to be comfortable, if you played your cards right you can retire and be comfortable, however for a lot of people, that’s not the case.

The end of 2016 was significant for both the UK and the US, so much so that it turned out being a significant year worldwide. Britain voted for BREXIT and the US, against all odds voted Donald Trump to become their 45th President. There were many people against both but the voters decided and even though there were many skeptics saying how everything would fall apart, the economies stabled and all is well.

The world took a big leap forward with AI in 2016 and this trend will seemingly continue in 2017, big financial institutions will look to use advanced AI to automate the process of dealing with their customers. Manufacturing companies will look to go down that same road, it will save time and money in the long run, streamlining the process and increasing productivity. Fast food chains have already rolled out self ordering facilities, taking that one step further with AI will mean automating the entire process. What does all this mean for employees? Considering that every commercial sector will be affected, jobs aren’t safe. Robots are just too efficient for humans to compete with.

How can we make sure we don’t lose out to the robots? Use your skills to get part time gigs, get extra cash, save it and invest. It sounds simple, because it is, if you have no special skills, go out and learn, you can’t expect to be able to do the same thing for the rest of your life with the way tech is moving forward. This is your chance now to learn about something you are passionate about and then create a career out of it, we need to collectively burst out of this little bubble because with rising inflation rates and stagnating salaries it will be very difficult for us to cope later on down the line.

 

Work hard, save to invest and make sure you come out on top no matter what the economy is doing. GSY

 

 

Sources

https://www.ipse.co.uk/sites/default/files/documents/research/exploring_the_uk_freelance_workforce_in_2016_v2.pdf

https://www.raconteur.net/business/freelancing-an-increasingly-attractive-option-for-uk-workers