Hi, I’m Erik Wolfers, founder and managing member of First and Main Financial. We’ve been helping clients with perfectly personalized financial solution since 2001—over twenty years now. Today, I want to talk just a little bit about the economy—mostly the US economy, but also the global economy.
Our economy here in the United States is miraculous. It’s just a miracle how many things you have access to, how efficient and competitive it is—if you’re trying to do something to your home, remodeling your home or something like that, there’s just a phenomenal amount of choice with respect to the quality of the materials that you can buy, the price of the materials, the availability of the materials—it really is a miracle.
With economic progress people’s lives become better. In the United States, even though of course we are not perfect and we have people that are in need (we don’t have a lot of people in need relative to most countries around the world), inflation has been relatively benign. Inflation can really hurt people’s ability to live a good life. We’ve had low inflation for over a decade now.
There’s been talk in the past about the economic cycle being dead. People used to think they could predict an economic cycle and how long things would last and the key components of an economic cycle—where you’re expanding and expanding at a rapid rate and then things fall apart, you go through a recession and then rebuild and start anew—we haven’t really had any measurable economic cycle for a while now.
I suppose there people that think they could look at charts or pictures or numbers and define some sort of cycle—we’ve obviously been through an unusual time with the pandemic, but in the United States because of the competitive nature of our economy and things just getting more efficient, and prices being kept in check or even going down for many things, the economic cycle in my estimation is pretty hard define.
Who knows what’s going to happen—people get better at financing operations. People get better at raising capital. There is an amazing amount of capital available. People get better at operations. People get better at sourcing—it just keeps going on and on and on. The world economy has advanced dramatically over the last several decades. Billions of people have been lifted out of poverty. It’s really fascinating to watch and hard to get total perspective on—but our economy is miraculous and it’s good for most people. Some people need help getting to be a part of it and participating in it, but most people, if they work and save, can participate—and in some places other than California, housing is cheaper.
The stock market right now is hitting new highs. We still have a ton of liquidity from the Federal Reserve Bank—that’s going to go away at some point. We haven’t really come back out of the pandemic fully from the drop in the economy, but that’s well on its way and the Federal Reserve Bank may start reducing liquidity next year—probably very likely. We do have signs of inflation. We don’t know whether those will be contained or the system will work those out once global supply chains become more efficient.
How long it will last, I don’t know. I have learned it’s not good to try to predict those kinds of things and just react, and instead plan for all circumstances depending on people’s ages and wealth levels and how much they’re saving. We’re hitting record highs in the stock market and I don’t know how long it’ll last, but our global economy is doing pretty well at the moment despite the pandemic.
If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.