This call was hosted by Prosperity Planning, a Registered Investment Advisor. Marci provided her own analysis and views on the economy, and her comments should not be construed as investment advice. Please consult Prosperity Planning for investment advice as it pertains to your specific needs. See below for a written summary and highlights of Marci’s key talking points.

Prosperity Planning was thrilled to welcome economist Marci Rossell back for a recent call with our community, focused on the current economic environment and the forces shaping it today.

Each time we have Marci join us, she brings a depth of experience from across both public policy and media, including her work as Chief Economist for CNBC and as an economist with the Federal Reserve Bank of Dallas.

Joined by members of the Prosperity Planning team, Marci’s update covered several timely topics, including rising oil prices, inflation trends, Federal Reserve dynamics, and the evolving role of artificial intelligence.

OIL PRICES AND A SHIFTING GLOBAL LANDSCAPE

Marci began with oil prices, where recent geopolitical disruptions have played a central role.

She pointed to the Strait of Hormuz, which has historically carried roughly 20% of global oil supply. Recent disruptions reduced traffic, contributing to a sharp rise in oil prices from around $60 per barrel to as high as $120, before settling closer to $100. That kind of move naturally raises questions about how these changes ripple through the broader economy.

While comparisons to the oil shocks of the 1970s are often made, Marci highlighted an important difference. At that time, countries like Iran represented a larger share of global supply, around 8.5% compared to closer to 5.5% today, which amplified the impact of disruptions.

She also noted how much the U.S. position has changed. Since the growth of domestic production, the U.S. has been a net exporter of oil, which helps make the overall economic impact of higher prices more balanced at a national level.

At the same time, that balance does not mean these shifts are felt evenly across households. Higher energy costs still work their way into everyday expenses, particularly for lower-income households. Marci noted that the impact of these price changes can look different depending on where they are felt within the economy.

INFLATION AND WHAT’S DRIVING RECENT CHANGES

From there, Marci connected higher energy costs to what we’re seeing in inflation, as those increases begin to move through the economy.

She noted that inflation has moved from around 2.5% to approximately 3.5% year over year, with the potential to rise closer to the 4% to 4.5% range as those effects continue to build.

Rather than describing this as a sudden shift, Marci framed it as part of a broader adjustment. She pointed to energy costs as a key driver behind the recent increase, with those higher costs continuing to influence overall price levels.

She also spoke to the gap between how people feel and how they behave. While consumer confidence readings are currently low, spending has remained relatively steady. Marci explained that this disconnect is one reason confidence may be a less reliable indicator of actual economic activity than it has been in the past.

THE FEDERAL RESERVE IN TODAY’S ENVIRONMENT

As inflation evolves, attention naturally turns to the Federal Reserve.

Marci spoke about the upcoming leadership transition, with Jerome Powell’s term concluding and Kevin Marsh expected to step into the role of Chair. While leadership changes tend to draw headlines, she emphasized that the Fed is designed to operate with continuity.

She walked through its structure, including a 12-member Federal Open Market Committee, staggered long-term appointments, and an independent funding model. These features are intended to support decisions that are less influenced by short-term political pressures.

In the current environment, Marci noted that expectations around interest rates have shifted. Markets that once anticipated rate cuts have started to adjust, as lowering rates too soon could add further pressure to inflation.

THE LABOR MARKET AND A SHIFT IN HIRING DYNAMICS

Marci then turned to the labor market, noting that while it looks relatively stable at a high level, there’s an underlying cautious tone particularly when it comes to hiring.

She described the current environment as “no hire, no fire,” where companies are generally holding onto employees while slowing the pace of new hiring.

She noted that initial unemployment claims have remained steady, suggesting that widespread layoffs aren’t taking place. At the same time, fewer new opportunities, especially at the entry level, have made it harder for new workers to gain traction.

As firms work to integrate new technologies, Marci explained that many are leaning more heavily on experienced employees, contributing to a slower pace of hiring and a more measured approach to adding new roles.

HOW ARTIFICIAL INTELLIGENCE IS SHAPING PRODUCTIVITY AND GROWTH

That same caution around hiring also ties into how companies are approaching artificial intelligence. It was another major focus of Marci’s update, particularly in the context of productivity and longer-term growth. She pointed to how quickly adoption has accelerated, moving from roughly 20% of firms to 40%, then 60%, with expectations that it could reach 80% in the near term.

At the same time, productivity growth has picked up, increasing from about 1.8% annually prior to 2019 to closer to 2.8% more recently. Over time, Marci noted that this kind of shift could shorten how long it takes for living standards to improve.

She described AI as largely complementary, similar to how earlier technologies enhanced productivity rather than fully replacing roles. While certain tasks may be automated, much of the impact is expected to come from improving efficiency and output.

As adoption continues, Marci also noted that how those gains are shared across the economy may become an important consideration.

HOW THIS CONNECTS TO YOUR FINANCIAL PICTURE

Across Marci’s remarks, each topic reflected a different part of today’s economic environment, from oil prices and inflation to Federal Reserve policy, labor trends, and the growing role of artificial intelligence.

Taken together, her comments offer a clearer view of how these forces are unfolding across the broader economy.

We appreciate the opportunity to have Marci join us, as her commentary helps provide helpful context around these developments. For many, the question then becomes how these trends connect back to their own financial picture. If you’re thinking about how today’s environment may affect your personal financial plan, the team at Prosperity Planning is always available to help you work through those decisions with confidence and alignment to what matters most to you.

For those who would like to explore Marci’s insights more fully, the complete recording is available below.

Ready to get Started?

Schedule a call with one of our Certified Financial Planner™ (CFP®) professionals today!

Investment advice, financial planning, and retirement plan services are provided by Prosperity Planning, Inc., an SEC registered investment advisor. The information contained herein, including but not limited to research, market valuations, calculations, estimates and other material obtained from these sources are believed to be reliable. However, Prosperity Planning, Inc. does not warrant its accuracy or completeness. The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or to participate in any trading strategy. If an offer of securities is made, it will be under a definitive investment management agreement prepared on behalf of Prosperity which contains material information not contained herein and which supersedes this information in its entirety. Any investment involves significant risk, including a complete loss of capital and conflicts of interest. Past performance is no guarantee of future results. The applicable definitive investment management agreement and Form ADV Part 2A will contain a more thorough discussion of risk and conflict, which should be carefully reviewed before making any investment decision.