Once again, Marci engaged our clients with a lively discussion of the economy. If you were unable to join us, here are a few highlights.

The Federal Reserve is winding up its lightning round of interest rate increases, which raises the question of whether we're going to have a hard landing or recession. Marci said she does not see a true recession on the horizon -- which she defined as a “prolonged period of economic decline across multiple sectors, generally lasting six months or more”.

To make her point, she made some comparisons between today and the 1970-80s, when the economy was battling high inflation and rapidly rising interest rates. For example, the oil embargo and withdrawing from the gold standard in the 1970s were unique in their impact on inflation and monetary policy.

What to look for in the next six months:

Expectations are for a 0.25% increase in the target Federal Funds rate at the next Federal Reserve meeting, then hold at that rate until year-end.
Some market watchers believe the Fed will be pressured cut to begin lowering rates if the economy falters or if there's more instability in the banking sector. Marci predicts they will not lower interest rates until inflation comes down.
As rates come down, she expects to see a recovery in interest sensitive sectors such as residential real estate.
The stage is set for another debt ceiling showdown in Congress which could trigger volatility in the financial markets up until June. She expects it to go down to the wire and that rational actors will make a deal at the very end.

For Marci’s full commentary and answers to participant questions, the audio recording is available below:

This event was presented on 4/18/2023. It is for informational purposes only and should not be considered investment advice. Opinions expressed are as of the date of recording. Such opinions are subject to change. The views and opinions of Marci Rossell are not necessarily those of Prosperity Planning. Prosperity Planning is not affiliated with Marci Rossell. All investments are subject to investment risk, including possible loss of principal. Individuals should seriously consider if an investment is suitable for them by referencing their own financial position, investment objectives and risk profile before making any investment decision. Please consult your advisor for investment advice as it pertains to your specific needs.

Economist Marci Rossell, Ph.D. engages audiences nationwide, communicating complex economic issues in a way that is relevant to people’s lives, families, and careers. Her animated style was honed when she served as the popular, lively Chief Economist for CNBC. Prior to her career in broadcast journalism, Marci served as an economist with the Federal Reserve Bank of Dallas and earned a PhD in economics from Southern Methodist University.