When the Economy Gives Us Uncertainty, Every Dollar Needs a Purpose
Uncertainty does not require prediction. It requires clarity about what each dollar is meant to do.
Over the past few weeks, I have heard different versions of the same question: “Should we be doing anything different right now?”
It is a fair question.
Markets have been resilient. Interest rates are still high. Inflation has improved in some areas, but it is not back to normal. The Fed is divided. Economic growth is positive, but not as strong as many would like. Depending on which headline you read first, you could walk away feeling encouraged, cautious, or confused.
That is why the better question is not simply, “What did the market do this month?”
When the markets and economy give us uncertainty, we need to be certain to give every dollar a purpose.
The mistake is letting money sit in the wrong place for the wrong reason.
What Happened This Month
The Federal Reserve held its target range for the federal funds rate at 3.50% to 3.75% on July 29. That decision was approved by a 9–3 vote, with three Fed officials preferring to raise rates by 0.25%. The Fed also stated that inflation remains elevated relative to its 2% goal.
That matters because rates are not just a Wall Street topic. Higher rates affect cash yields, bond prices, borrowing costs, mortgages, business financing, real estate values, and retirement income planning.
Inflation data was mixed. CPI fell 0.4% in June, helped by lower gasoline prices, but it was still 3.5% higher than a year earlier. Core CPI, which excludes food and energy, was unchanged for the month and up 2.6% over the year.
The Fed’s preferred inflation measure, PCE, also cooled in June, but remained above target. The PCE price index decreased 0.1% for the month, but was still up 3.7% from a year ago. Core PCE was up 3.3% from a year ago.
The economy also gave us a mixed message. Real GDP grew at a 1.5% annual rate in the second quarter, down from 2.1% in the first quarter. But a more focused measure of private demand — real final sales to private domestic purchasers — increased 3.9%, compared with 1.7% in the first quarter.
In plain English, the headline growth number slowed, but the underlying consumer and business activity looked better than the headline alone.
The labor market is also worth watching. June payroll employment increased by 57,000, and the unemployment rate was 4.2%. The July employment report is scheduled to be released on August 7, 2026, so we will continue watching whether the labor market is cooling gradually or weakening more meaningfully.
Markets, meanwhile, have continued to hold up. Through July 31, AP reported the S&P 500 was up 9.4% year-to-date, the Nasdaq and Dow were each up 9.2%, and the Russell 2000 was up 18.1%.
So, which is it? Are things good or risky? The honest answer is: both.
That is normal. Most environments are not all good or all bad. The question is whether the plan is clear enough to help us know what deserves action and what only deserves awareness.
Signal vs. Noise
Here is a simple way to think about the current environment:
| Headline | Signal or noise? | Planning question |
|---|---|---|
| Fed holds rates steady, but three officials wanted a hike | Signal | Are we prepared if rates stay higher for longer? |
| Inflation improved in June, but remains above target | Signal | Are inflation assumptions built into spending and income planning? |
| Stocks are positive year-to-date | Signal, but incomplete | Has market movement changed our allocation or risk exposure? |
| GDP slowed, but private domestic demand improved | Signal | Are we watching the full picture, not just one number? |
| Oil prices and geopolitical headlines keep moving markets | Often short-term noise, but signal if persistent | Do we have enough liquidity and flexibility? |
| Market forecasts keep changing | Mostly noise | What does the plan require, not what does a forecast predict? |
The purpose of a financial plan is not to predict every headline. It is to help you know what to do when headlines are incomplete.
The Planning Question Clients Should Be Asking
The question is not, “Should I be in or out of the market?”
That is rarely the right question.
For some clients, that may mean increasing liquidity. For others, it may mean putting idle cash to work. For some, it may mean paying down higher-interest debt. For others, it may mean reviewing tax strategies before year-end. For retirees, it may mean making sure the next few years of planned expenses are properly accounted for in the income strategy.
The right answer depends on what phase of life and planning you are in.
For Phase II Clients in the Accumulation Phase
For Phase II clients in the Accumulation Phase, I believe this is a good time to continue building liquidity and flexibility.
But liquidity does not necessarily mean cash.
Cash can be useful. It can provide safety, flexibility, and comfort. But too much cash, held for too long without a clear purpose, can also become a drag if it is not connected to the plan.
For many clients still accumulating wealth, new funds may be better directed toward one of three areas.
High-quality, liquid investments
For appropriate clients, liquidity may include diversified exposure to higher-quality, blue-chip-oriented companies or other liquid growth strategies that can still participate in long-term market growth. These assets can decline in value, so they should not be treated like emergency cash. But for dollars intended for long-term growth and future opportunity, they may have a role.
Higher-quality fixed income
Higher rates have made bonds more relevant again. For the right client, high-quality fixed income can provide income, diversification, and a more defined role in the plan. The key is matching credit quality, duration, and liquidity to the purpose of the money.
Higher-interest debt
If you have personal residence debt, business debt, or investment debt above roughly 6.5%, it may be worth asking whether additional funds should be used to reduce that debt. Not all debt is bad, and not all debt should be paid down immediately. Tax treatment, cash flow, liquidity, and opportunity cost all matter. But in this rate environment, higher-interest debt should not be ignored.
Why does this matter now?
Because market corrections are a normal part of investing. We do not know when they will happen, how deep they will be, or what will cause them. But we should assume they will happen at some point.
Higher liquidity and flexibility can put clients in a better position to respond when valuations become more attractive. The goal is not to predict the correction. The goal is to be prepared enough that future volatility can become an opportunity instead of a surprise.
Tax Planning for Higher-Income Clients
For high-income earners, this is also a good time to review tax strategy before year-end planning becomes rushed.
Depending on the client’s situation, that may include:
- Oil and gas partnerships
- Qualified Opportunity Zone investments
- Donor-advised funds
- Qualified charitable distributions
- Roth conversion planning
- Charitable giving strategies
- Tax-loss harvesting or gain harvesting
- Business-owner deductions
- Estate and legacy planning
These strategies are not interchangeable. They are not appropriate for every client. Some involve illiquidity, complexity, tax reporting, K-1s, investment risk, or long holding periods. Some may also require coordination with a CPA or attorney before any decision is made.
The important point is this: high income creates the need for proactive planning.
Waiting until December often limits the options.
If your income, capital gains, charitable giving, or business income is likely to be unusually high in 2026, now is the time to review the strategy with SIG and your CPA.
For Phase III Clients in the Strategic Income Phase
For Phase III clients in the Strategic Income Phase, the focus is different.
The question is not simply, “How did the market perform?”
This is especially important during uncertain markets. If we know money will be needed soon, we do not want that need to surprise the portfolio.
That means reviewing not just normal monthly expenses, but the larger one-time expenses that may be coming.
Upcoming expenses to consider
- Does the house need painting?
- Is an air-conditioning unit nearing replacement?
- Is a new vehicle likely in the next few years?
- Are there major home repairs coming?
- Are there family trips, weddings, college expenses, or family gifts to consider?
- Are there tax payments, insurance premiums, or charitable commitments that need to be planned?
- Are there business, real estate, or investment obligations coming due?
These items matter because they should be planned for before the money is needed.
The budget is not just what you spend every month. It is also the large expenses we can see coming if we take the time to look.
For clients in the Strategic Income Phase, we want to know whether those upcoming expenses should be held in cash, short-term fixed income, the Income bucket, the Income+ bucket, or another part of the plan.
The goal is to avoid being forced to sell the wrong asset at the wrong time.
Higher rates can help income planning in some areas, but they can also pressure existing bond prices and increase borrowing costs. Inflation may be improving, but it still affects spending, travel, healthcare, home maintenance, and lifestyle.
That is why the next two to three years matter.
If you know you have upcoming expenses, get those details to your planner. The more we know, the better we can align the plan.
Retirement income planning is not just about what the market returns this year. It is about coordinating cash flow, taxes, risk, liquidity, and life.
What We Are Watching at SIG
At SIG, our work is not to react to every headline. Our work is to help clients make wise decisions with the information available.
That means we are reviewing:
- Interest-rate trends
- Inflation data
- Income opportunities
- Portfolio liquidity
- Bond positioning
- Tax-planning windows
- Retirement income needs
- Market valuations
- Client spending needs
- Planning assumptions
- Strategies that may complement traditional stock and bond allocations for appropriate clients
We are also carefully implementing AI.
Not as a shortcut. Not as a replacement for personal advice. And not as something that makes market decisions for clients.
We see AI as a tool that can help our team organize research, improve workflows, prepare more efficiently for planning conversations, and spend more time on the judgment-based work clients actually need.
The technology may change. The responsibility does not.
Clients still need thoughtful advice. They still need planning judgment. They still need someone to help them decide what matters and what does not.
What Clients Should Review Now
This month, I would encourage clients to review five areas.
Closing
Markets will always give us uncertainty.
That is not new.
The question is whether we respond with anxiety, distraction, or clarity.
When the markets and economy give us uncertainty, we need to be certain to give every dollar a purpose. That is the work of planning. And that is the work our team is committed to doing with you.
If this article raised a question about your liquidity, taxes, income plan, debt, or upcoming expenses, please bring it to your SIG planner. And if someone in your family is asking similar questions, feel free to share this with them.
Have Questions About Your Plan?
Schedule a conversation with a Strategic Income Group financial planner to review your liquidity, tax strategy, debt, income plan, upcoming expenses, and whether each part of your portfolio is still doing the job it was designed to do.
Laurie Simons
CFP®, CTFA®
East Valley Office
Book with Laurie
Chad Manberg
CFP®
West Valley Office
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Keri Alcos
CWS®
West Valley Office
Book with KeriNot Sure Who to Schedule With?
Our team can help connect you with the right planner and appointment type.
Contact Strategic Income GroupCompliance Note
This article is for educational purposes only and should not be considered individualized financial, investment, tax, legal, or insurance advice. Your situation is unique, and decisions should be made in coordination with qualified professionals who understand your full financial picture. Investment strategies involve risk, including the possible loss of principal, and no strategy can guarantee results. Tax and estate planning strategies should be reviewed with your CPA and attorney. Market conditions, tax rules, and laws can change.
Any strategy discussed may not be suitable for every investor. Suitability depends on your goals, risk tolerance, time horizon, liquidity needs, tax situation, and overall financial plan.
Strategies involving alternative investments, oil and gas partnerships, Qualified Opportunity Zone investments, digital assets, commodities, tactical allocation, or private investments may involve additional risks, including volatility, illiquidity, valuation uncertainty, tax complexity, higher fees, limited transparency, and possible loss of principal. These strategies should be reviewed carefully before considering any allocation.
Indexes are unmanaged and cannot be invested in directly. Index performance does not reflect fees, expenses, or the performance of any specific client portfolio.
