• Although year-over-year inflation eased a bit in August to 8.3% from 8.5% in July, it remains far above the Federal Reserve's target rate of 2% — which means more interest rate hikes are likely.
• The rate of unemployment remains low — 3.7% in August, up from 3.5% in July — yet some clients of financial advisors worry about possible job loss.
• Home affordability also is a concern as rising mortgage rates and high prices have limited options for some potential buyers.

With high inflation and rising interest rates fueling speculation that a recession is on the horizon, it may come as no surprise that financial advisors are hearing these concerns from their clients.

Year-over-year inflation eased a bit in August to 8.3% from 8.5% in July, but it remains far above the Federal Reserve's target rate of 2%. The central bank raised a key interest rate in September by 0.75 percentage points — for the third consecutive time — to combat inflation, and further hikes are expected.

We spoke with experts from CNBC's Financial Advisor Council to see what they were discussing with their clients.

So, what is a big worry for clients in this economic environment? "What the labor environment is going to look like and what their risk is as far as unemployment goes," said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York, whose clients are largely between ages 28 and 42.

"At this point it's speculation," Boneparth said. "It's hard to point to data that says we need to be concerned right now." 

The unemployment rate remains low: The most recent U.S. Bureau of Labor and Statistics data shows an unemployment rate of 3.7% for August, up slightly from 3.5% in July. 

Memories of the Great Recession linger

Yet some clients have memories of the 2008-2009 Great Recession and its accompanying broad-based job losses. In December 2007, ahead of the economic woes brought on by the financial crisis, the U.S. unemployment rate was 5%, according to the BLS. It peaked at 10% in October 2009 — several months after the official end of the recession — but it took until 2015 for it to settle at 5% again.

Boneparth said the labor market concerns come primarily from clients who work for startups that are largely tech-related. 

"If you work for a venture-capital-backed company, and the last round of capital you raised was six months ago and you're going into a more difficult fundraising environment, you want to think about that risk," Boneparth said.

Same goes for someone who's considering leaving a secure job for one that is higher-risk, he said.

High home prices also generate angst

High home prices — in conjunction with an average 30-year mortgage rate of 6.8% as of Sept. 28, up from 3.3% at the start of 2022 — also are causing some worries.

While there are signs that the housing market is cooling, high prices and rising mortgage rates are still causing angst for those looking to buy.

One of CFP Louis Barajas' clients recently moved to Miami from Southern California and discovered a housing market that didn't look much better than what he had moved from. In Los Angeles, the typical home — i.e. the middle tier of houses — in August sold for about $972,800, according to Zillow's home value index. That compares to $356,000 nationally.

In the Miami area, home prices in August were up 30.7% from a year earlier, compared with 15.8% for the nation as a whole, according to Zillow. The typical house in Miami sold for $560,200 last month.

"My client couldn't believe how expensive homes are in Miami," said Barajas, president and partner at MGO Private Wealth in Irvine, California.

The client plans to delay buying a house with the hope that prices come down.

"Some clients remember the 2008-2009 recession when property values dropped a lot," Barajas said.

Fear of market volatility weighs on some clients

Meanwhile, some clients worry about volatility in the stock market — especially those who are retired and relying on savings to fund their post-working years.

The S&P 500 Index, a broad measure of how U.S. companies are faring, is down more than 14% in the last 12 months through Sept. 28. The Dow Jones Industrial Average has slid more than 13% in that time, and the tech-heavy Nasdaq Composite index has lost more than 23%. 

"The biggest concern for my clients is all of the uncertainty in the world," said CFP Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida. "They wonder 'what's next' and how that would affect the market — so it's along the lines of fear of market volatility."

For older clients, their portfolio risk already is low "so market volatility isn't going to affect their life goals," she said. "But we have had three or four retirees recently want to know if their [spending level] is okay."