Fed Anticipates Stronger Growth, Higher Inflation
The Federal Reserve Board maintained its key interest rate at 3.5%-3.75% in March, acknowledging concerns of rising inflation. While the news came as no surprise, the more revealing update was in the new Summary of Economic Projections, where the Fed raised its inflation and economic growth forecasts. We view these adjustments as reasonable and broadly consistent with our expectations on inflation and growth.
Though inflation has made meaningful downward progress since the highs of 2022, we think it’s unlikely to reach the Fed’s 2% target this year. As evidenced by above-trend economic growth, the Fed’s key interest rate is not restrictive enough, a stance that may lead to persistent inflationary pressures. On top of that, the oil-shock stemming from the Iranian war will not only impact energy-related inflation, but also indirectly influence the cost of other goods and services as oil plays a critical role across the entire supply chain. Then you still have new tariff costs, which continue to be passed down to consumers.
On the growth side, we’re expecting an acceleration of economic growth this year, supported by strong corporate earnings, fiscal stimulus, resilient consumer spending, a healthy labor market, and easier year-over-year comparisons. That said, a drawn-out Middle East conflict could certainly weigh on economic growth projections. Given the current backdrop, we don’t see the value in the Fed cutting interest rates again until further progress is made on inflation.
We Don’t Think This Will Happen
A recent study conducted by Indiana University Lilly Family School of Philanthropy projects that charities this year will lose up to $5.7 billion annually because of the One Big Beautiful bill. Why? Taxpayers in the 37% tax bracket in 2025 who gave $100,000 saved 37 cents in taxes but beginning this year they will deduct it as if they are in the 35% tax bracket. Thus, this year the deduction will only save 35 cents in taxes… $2,000 less. The study draws on information gathered from philanthropists’ reactions to past changes in charitable giving and other data at Lilly School.
Most of our clients who are philanthropically inclined appreciate the tax deduction, but they primarily give to causes for which they have a passion. We simply don’t see them becoming less inclined to give money to their favorite charities and/or place of worship.
What we do see is a potential for even more money going to charity since the new law also provides that taxpayers who do not itemize can now give up to $2,000 for married couples and $1,000 for single taxpayers to charity and deduct the contributions on top of the standard deduction amounts of $32,200 married filing jointly and $16,100 for singles in 2026. Only time will tell.
Understanding Estimated Taxes: Why Penalties Are Surging
In 2024, Americans earning between $200,000 and $500,000 paid a staggering $1.3 billion in tax penalties, a figure that has tripled since 2021. What’s behind this sharp rise?
A major reason is the growing number of people experiencing life changes such as retirement, launching side businesses, or becoming self‑employed. In these situations, taxes are not automatically withheld, leaving individuals responsible for calculating and submitting their own estimated payments.
The spike in penalties is largely the result of confusion about estimated quarterly tax requirements. Anyone receiving income without withholding, such as from investments, rental properties, or self‑employment, must make estimated tax payments each quarter. Failing to do so triggers interest charges on the underpaid amount for each quarter it was missed.
Over time, the underpayment interest rate has increased. In 2021, the rate was 3%; in 2025, it climbed to 7%, significantly increasing the cost of underpayment. For example, if a taxpayer realizes a capital gain in February but waits until December to pay the associated tax, they will owe three quarters’ worth of interest on that income.
How can taxpayers avoid these penalties? One option is to follow the IRS safe harbor rules. Generally, you can avoid underpayment penalties by paying:
- 100% of your prior-year tax liability if your adjusted gross income was $150,000 or less, or
- 110% of your prior-year tax liability if your income was above that threshold.
And, as always, it’s important to consult with your tax professional to determine the best approach for your situation.
Estimated Taxes Are a Pain. Here’s How to Avoid Costly Penalties. – WSJ
What Does War in the Middle East Mean for You?
In most places across the country, citizens have seen a dramatic and recent spike in gas prices. Just a few short months ago, the national average for gasoline was $2.81 per gallon (January 2026). Now, towards the end of March, it is not uncommon to see gas at over $4 per gallon. For the average American, that might mean one less night out during the month or skipping that extra box of cookies at the grocery store. It may also cause immediate difficulty for small business owners that deliver their product or rely on frequent deliveries of goods. Fortunately, these changes do not appear to be permanent.
The War in Iran has resulted in a narrow Middle Eastern waterway called the Strait of Hormuz being closed. Iran polices global access to the strait and has barricaded it off, which has consequently dampened the standard flow of oil exportation (~20 million barrels per day). As a result, many of the other Middle Eastern oil-producing nations have not been allowed to export their oil to the rest of the world.
America buys about 800,000 to 1,000,000 barrels of oil from the Middle East every day. That is, however, only a fraction of full American consumption, which is also about 20 million barrels per day. The United States has made tremendous progress over the last decade to become energy independent. The strength of domestic production has partially allowed U.S. stocks to outperform internationals throughout oil market turbulence. With that in mind, the United States is positioned relatively well to weather supply shocks like the current one.
While no one has forecasted an end to the war, it is not expected to be long and drawn out. A quick resolution to the conflict would likely bring oil prices back down closer to their normalized, seasonally adjusted range. If the war does drag out longer than anticipated, America has the capacity to ramp up domestic production and fill the supply gap. Either way, gas prices might be scary to look at for now, but it is likely a temporary pain that we hope to be a blip in the past soon enough.
Up, Up and Away in My Beautiful Debt Balloon
With the national debt just recently flipping over another trillion dollars, it occurred to us that a history lesson about the U.S. grappling with its debt might be in order. The U.S. has had a national debt in every year of its history since the Constitution went into effect in 1789, with only one exception. The only time in U.S. history the national debt was completely paid off was in 1835. President Andrew Jackson, who viewed debt as a “moral failing,” used a massive government surplus from land sales and high tariffs to reach a balance of zero on January 8, 1835. This status lasted for about one year.
The Panic of 1837 triggered a severe economic depression, forcing the federal government to resume borrowing by 1838. The U.S. began with $75 million in debt, primarily inherited from the costs of the Revolutionary War. About halfway through the Civil War the debt surpassed $1 billion for the first time. Following World War I the debt reached $27 billion. At the conclusion of World War II in 1946, the debt hit a then-record peak relative to the economy (118% of GDP) at $269 billion.
In 1982 the debt reached $1 trillion for the first time under the Reagan administration. It reached $2 trillion in 1990 in large part to fund the Gulf War. It went over $7 trillion in 2004 to fund the beginning of the Iraq War and doubled to $14 trillion following the Great Recession and doubled again to $28 trillion in 2021 about two years into the COVID crisis. Just this month it crossed $38 trillion owed to domestic and foreign investors. The most recent year the U.S. government ran a budget surplus (taking in more than it spent) was 2001, though this did not eliminate the existing multi-trillion-dollar national debt. Someday, if you want to feel very depressed, go to www.us-debt-clock.com to get an up-to-date account of the national debt.
Those Saving for Retirement Abandoned by the Department of Labor
Back during the days of President Obama, the Department of Labor (DOL) proposed a set of rules regarding retirement funds that required financial advisers to provide advice to investors at a fiduciary standard of care. It required the adviser to always put the client’s interest ahead on his/her own. Our Founder and Executive Chair, Ray Ferrara, CFP®, had the privilege of testifying in favor of the provision before a DOL commission that was tasked with hearing public comment. And believe us, they got an earful from both sides. There was no middle ground on this idea.
Big corporate interests in the insurance and securities business opposed the fiduciary standard of care. The provision was stopped in the courts but was resurrected during the President Biden’s term. Now, two Texas federal judges vacated the ruling which was undefended by the DOL. Consumers lose, those that don’t want to be required to act in the client’s best interest win. ProVise has acted as a fiduciary with its clients since it first registered with the SEC back in 1988.
How Long Does it Take to Get a Death Benefit Paid?
Well, not too surprisingly it depends on where you live. Thanks to our friend, David Howell, who shared the following information. One of his clients inquired and it caused him to do some research. The clock generally starts ticking when the life insurance company receives the death claim form and death certificate. Florida does not specify a specific number of days but does require that the carrier pay interest from the date of death or notice of death.
10 Days: Connecticut and Kansas
15 Days: Tennessee and Utah
20 Days: Louisiana
30 Days: About half of U.S. states require life insurance claims to be paid within 30 days after receipt of proof of death. If payment is delayed, interest begins accruing—either starting on day 31 or retroactively from the date of death or proof of loss, depending on the state. These are: Alabama, Arizona, California, Delaware, Georgia, Hawaii, Idaho, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, and Wisconsin.
45 Days: New Mexico and Wyoming
60 Days: Alaska, Arkansas, Illinois, Michigan, Minnesota, New Jersey, North Dakota, and South Dakota.
Several states require interest to accrue from day one (e.g., from death or proof of loss), including Colorado, Florida, Mississippi, New York, Ohio, Rhode Island, Texas, Vermont, Virginia, Washington, and West Virginia.
Scams, Scams, and More Scams
People trying to get our money work year-round, but scamming is especially prevalent during tax time. Let’s just start with this reminder – no one from the IRS or any other agency of the government is going to call or text you to “solve” a problem. Period. Paragraph. End of story. Well not quite.
In the world of AI, scamming has become MUCH more proficient at fooling people. A simple picture of a person, or just a sentence or two of someone speaking is enough for AI to create a video of a person and/or to imitate a voice. First rule, if the phone call, text, or email feels funny, do not share your credit card or bank account information. Don’t use the telephone number the scammer shares with you but, use the number on the back of the credit card, or statement from the bank.
If someone calls and says a family member has been arrested or is hurt, try to call that family member on their cell phone even if the voice on the other line sounds just like that family member. When the person calling says they don’t have their cell phone, don’t believe them.
If you get an email with a video of a celebrity asking for money to help poor people in a foreign country, don’t fall for the potential scam. Research the organization before sending money and do it at their website if you are so inclined. Emails and ads can look like they come from “official” places so don’t use the link they provide. Get a real link to the company that is doing the advertising. Whenever someone adds urgency to the call, email, text, video be extra careful because it is unlikely that anything legitimate must be done this instant.
One of biggest scams around these days are romance scams. We experienced this firsthand at ProVise when one of our elderly clients fell victim. Nothing we could say or do would have stopped her had it not been for our ability under the law to essentially freeze the account and then to reach out to her trusted contact. If you don’t recognize a number on your phone, don’t answer it. They will leave a message if it is important. If not, nothing likely is lost. Let’s end where we began. If it feels wrong, it probably is.
Up Your Assets™ Podcast
Episode 29 – The Truth About Life Insurance (Before You Buy Anything)
Most people don’t fully understand how life insurance really works or quite possibly are overwhelmed by all the options available to them. In this eye-opening episode Ray Ferrara, CFP® teams up with Barry Flagg, CLU, ChFC, CFP®, a lifelong innovator in the insurance industry who’s revolutionized how consumers and advisors understand policy costs. If you’ve ever wondered whether your life insurance policy is working for you or how to optimize one in the future…this is a worthy listen for consumers, financial advisors, or anyone puzzling through the complexity of life insurance. Don’t let your heart be troubled — tune in now and learn the from the two of the best.
Acknowledgements and Important Disclosures
From the Up Your Assets website
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