Economics 101 a la Edward Jones Investment Strategist!
Craig Fehr is a General Partner and Investment Strategist for Edward Jones. His job is to analyze and interpret economic and financial market trends to develop strategies to help investors achieve their financial goals. He works with 15,000 Edward Jones financial advisors who serve eight million investors.
Craig gave us his Cliff Notes version of the status of the U.S. economy. In general, the economy is still flowing but is not as strong as last year. Last year’s growth was “sort of” 3%. He does not expect the same growth this year. The U.S. economy has been in a “sluggish” expansion for several years. “Sluggish” means that it is not like the 2004-2007 rip-roaring expansion. The current sluggish expansion has prevented many of the economic imbalances that resulted in the 2007 recession. He believes, however, that we are in the last stages of expansion and that recession will ultimately follow. But when? He does not think the recession will hit us in 2019 or 2020.
Based on its behavior, that the stock market seems to believe the recession is coming sooner, but he’s not convinced, for several reasons. First consumer spending is still strong. Our economy is not based on manufacturing, as it once was, but rather on consumer spending. Second, the unemployment rate, 3.7%, is still at an all-time low. We’ve even seen some moderate wage growth recently. And, even Thursday morning the initial jobless claims report had dropped again to nearly record levels. Craig thinks that all of this means that there is still room for growth in this sluggish expansion. He’s watching the unemployment rate; when it hits 4.2%, we’ll start to see recession.
Thank you, Craig, for the amazing insights into a complex situation. We are amazingly lucky to have had you speak to our club in a clear and informative way that allowed all of us to better understand the situation. (Now get to work figuring out how to avoid a recession altogether!)
