Stimulus Checks, Inflation and More of the Biggest Financial News Stories of the Year
Many of 2021’s news cycles focused on politics, polarization and, of course, the virus — but all year long, some of the wildest headlines came out of newsrooms that cover the financial world. It started right away in January, with a rising meme stock and a short squeeze for the ages unfolding in the year’s first month. By the time the stimulus checks started arriving in the spring, it felt as if an entire year’s worth of financial news had already played out.
Now with 2021 almost in the books, here’s a look back at the financial headlines that defined the year.
The biggest money story of the year by far was the one that involved the government putting cash straight into people’s bank accounts. The American Rescue Plan was the third major pandemic-relief package and the Biden administration’s signature achievement.
By spring, stimulus checks for $1,400 started arriving in bank accounts and mailboxes — $2,800 for couples — plus another $1,400 for each qualifying dependent. That — along with advance payments on the newly enhanced child tax credit — represented one of the greatest transfers of wealth in history.
Check Out: The Biggest Problems Facing Social Security
The No. 2 biggest story of the financial year was not about American households gaining wealth through stimulus, but about them losing their purchasing power to the withering effect of inflation. A long list of factors contributed to the ever-rising prices that defined so much of 2021 — the release of a year’s worth of pent-up demand, global supply chain woes and new demand created by the stimulus payments, to name a few.
Inflation started ticking up early in the year and by the end of summer, it was clear that rising prices would be part of the holiday shopping season. The most recent CPI report showed that inflation rose by 6.8% in November, the highest rate in nearly 40 years since 1982.
One of the biggest stories of 2020 involved the trillions of dollars that the world’s richest people added to their personal fortunes during the pandemic — Jeff Bezos famously broke the $200 billion mark that August.
But in 2021, one billionaire would go on a run that made the Egyptian pharaohs look like small-time hustlers.
Bezos was in a race for the title of the world’s richest with French tycoon Bernard Arnault through the summer of 2021 — both men could boast around $200 billion — but Elon Musk was having none of it. As Tesla’s stock rose, so did Musk’s net worth until he became the third person ever to reach $200 billion in September. One month later, he became the first to reach $300 billion and by the start of November, Musk’s fortune was at more than one-third of a trillion dollars in personal wealth, making him the richest person in history.
All year long, it seemed, automakers and computer companies couldn’t get their hands on the microchips they needed to produce their cars and gadgets. For apparel companies, it was cotton and ink. For homebuilders, lumber was the building material that no one could seem to get in quantity at a sane price.
From factory shutdowns and a trucker shortage to port backlogs and rising income, the pandemic threw countless curveballs at the global supply chain, which contributed to rising prices, tight supplies and long shipping deadlines throughout the year and the holiday season.
GameStop: The Little Guy Pulled Off History’s Greatest Short Squeeze
Video game chain retailer GameStop was on the ropes at the end of 2020, missing estimates and withering under intense competition from the digital space. Wall Street smelled blood in the water and some of the biggest hedge funds and wealthy investors in the financial industry began shorting the company’s stock — betting against it to lose.
What they didn’t bet on was an upswell of support for GameStop simmering on Reddit. Loosely organized amateur day traders fought back, buying up GameStop stock to send it soaring by six-figure percentage points on individual trading days until shares gained 2,000% in January alone.
In one of the greatest examples of amateurs using technology to democratize the financial markets, the little guy won.
Dogecoin will forever be known as the world’s first meme coin, but the cryptocurrency that started as a joke was no longer a laughing matter when 2021 kicked off. In January, Dogecoin climbed more than 800% in a single day as celebrities like Elon Musk, Snoop Dogg, Gene Simmons and Mark Cuban went public with their support for the altcoin and the Reddit group working to buoy it the way it had GameStop. By May 4, Dogecoin was trading at 50 cents — a gain of 20,000% in a single year.
More From GOBankingRates